If you’re just embarking on a property purchase adventure, you’ll need to know about Quit Claim Deeds and Warranty Deeds. Property transactions seem to make paper like a rabbit makes bunnies and a Deed is just one of the many documents with which you’ll become familiar with and possibly the most important!
One of the most significant documents in the process of buying real estate of any description is the Deed, which specifies ownership of the property. Of the different kinds of Deeds, the most common are a Warranty Deed or a Quit Claim Deed and their purpose is explained here:
A Deed is the document by which property (real estate) is conveyed from one person to another. When you buy a home, the seller transfers the property to you by means of a Deed. When you marry and want to add your spouse to the home’s title, it is done via a Deed.
What a Deed is not is a sales contract. A sales contract is a promise to convey property in exchange for money (or something else).
The Quit Claim Deed
A Quit Claim Deed is used when, in lieu of a traditional sale, the transfer of title in the property occurs because of inheritance through a Will or as the result of a gift. Quit Claim Deeds are also common when real estate is placed in a trust or forms part of a divorce settlement.
A Quit Claim Deed is used when a person wants to sell a house or land, but doesn’t know if any other claims can be made on the property, or they aren’t sure where the property boundaries are. Quit claim Deeds don’t come with guarantees of any kind; you could buy a property, get a Quit Claim Deed, and find out later that the seller wasn’t legally entitled to sell the property at all.
The Warranty Deed
The Warranty Deed is by far the most common Deed used in real estate transactions. With a Warranty Deed, the seller, when transferring the title to the buyer, warrants that he owns the property free and clear of all liens. In addition, there are a number of other guarantees from the seller to the buyer. A Warranty Deed certifies that the property is free of any easements, liens, or other hindrances to ownership and includes a full description. It also asserts that the seller owns and can transfer full and clear title of the property.
With a Warranty Deed, its claims are backed up by a title insurance policy, protecting the lender or buyer from disputes about ownership or liens.
When comparing a Warranty Deed with a Quit Claim Deed, the main difference is in the guarantees. With a Quit Claim Deed, if the property isn’t what the seller promised, the buyer hasn’t any recourse. Under a Warranty Deed, if there turns out to be an impediment to title, the buyer can sue the seller and recover damages.
Warranty Deeds are generally viewed to be more valuable than a Quit Claim Deed, although, in some exceptional circumstances, this may not be the case.