Many people believe that a warranty deed and a quitclaim deed are the same things. However, they are not. Quitclaim deeds and warranty deeds are two of the most common types of real estate deeds. The contrast between them can be perplexing, but it is critical to understand before transferring possession of a property because it determines the future of ownership. To understand the difference between the warranty deed and the quitclaim deed, consider the difference between the grantor and the grantee. The grantor is the first party and the party selling or conveying. The second party, known as the “grantee,” is the buying or receiving party. Having established that, we’ll look at the warranty deed vs the quitclaim deed in this chapter, including the special warranty deed.
Warranty deed vs Quit Claim Deed: What Are They?
Warranty Deed
When you buy a property from a builder or a Realtor, you will almost certainly receive a warranty deed. This type of deed is used in more complicated real estate transactions involving monetary transactions between unrelated purchasers and sellers, such as obtaining a mortgage to purchase a home.
A warranty deed guarantees that the person transferring title to a property (the seller) has a defensible ownership interest in the property and may thus transfer their ownership interest to the other party (the buyer).
The warranty deed provides more peace of mind and less space for error because the seller or “grantor” guarantees their ownership.
The Significance Of a Warranty Deed
The grantor of a warranty deed can be sued if they misrepresent the ownership they guaranteed in a property that made the transfer possible. For example, if three siblings inherit a home from their mother and two of them decide to sell it without the agreement of the third party, the latter can sue to reclaim possession. Because a few of the siblings sold the property without the permission of all concerned parties, the present owners would be permitted to use the warranty they got under the warranty deed to bring in the other siblings to the lawsuit.
A quitclaim deed, on the other hand, provides no such protection to the buyer of the property. Instead, they would be forced to defend themselves and their ownership of the property in a protracted legal battle. This emphasizes the need of getting owner’s title insurance in the event that property ownership is questioned.
QuitClaim Deed
A quitclaim deed is typically used to transfer ownership between related parties, such as spouses, ex-spouses, or other family members. This sort of deed transfers the grantor’s—the person who is transferring a share in a property to another person—legal rights to a property if any exist, but without any representation, warranty, or guarantee.
A quitclaim deed gives no guarantees about the title status of a property, any liens against it, or any encumbrances.
Significance Of The Quitclaim Deed
A quitclaim deed has limitations, but it is still a document that can be used provided the grantor legitimately owns the land and there are no liens or difficulties to be mindful of. Quitclaim deeds are utilized in less risky situations where there is minimal doubt about who owns what.
Quitclaim deeds, for example, are frequently used when someone is transferring ownership interest in a property they own to a limited liability company or trust they also control, or when transferring ownership to a family member.
Uses of the Quitclaim Deed
Many instances need the use of a quitclaim deed, particularly when there is no real estate transaction involved. Some of these examples include:
- Giving the title a name: A quitclaim deed is the simplest way to join your spouse, kid, or any other person to the title of the property.
- Taking a name out of the title: A quitclaim deed is the simplest way to remove a name from the property title after a divorce or for any other reason.
- Giving ownership to a family member: A quitclaim deed will assist you in transferring the property to a child, parent, sibling, or any other member of your family. Because a quitclaim deed has no effect on the mortgage, it is simple to transfer ownership to someone else without burdening them with a loan.
- Property interest transfer to a business partner: In some circumstances, having your business partner’s name on your property title may be beneficial. A quitclaim deed is a quick and simple way to accomplish this.
- Corrections to the title: A quitclaim deed can readily correct any issue on the property title, from a misspelling to an incorrect address. This has no bearing on your mortgage data.
Warranty Deed vs Quitclaim Deed: Examples
Warranty Deed:
This is my property. I own it with a solid, unambiguous title, and no one else has any claim to it. I’ll give it to you.
Quitclaim Deed
This is a property. I believe it is mine, but I haven’t done the necessary investigation to confirm it. But I’m giving you the title to this property that I have.
Warranty Deed vs Quitclaim Deed: Similarities
There are several similarities between warranty deeds and quitclaim deeds.
Both sorts of legal documents transfer property ownership. Warranty and quitclaim deeds are legally binding documents that must be filed with the county clerk of courts.
Warranty Deed vs Quitclaim Deed: Differences
The grantor makes a separate legal statement in each deed. This is the primary difference between a warranty deed and a quitclaim deed. The warranty deed includes a commitment made by the grantor known as a warranty. The grantor, on the other hand, makes no assurance or warranty in a quitclaim deed.
A warranty deed guarantees that the grantor has a good, clear title to real estate. It also guarantees that the grantor has the legal right and authorization to sell it to the grantee or buyer. A quitclaim deed, on the other hand, gives no guarantees about the quality of the property’s title. It includes whatever the seller has. However, it does not guarantee that the seller has title to a piece of real estate. A quitclaim deed is simply used to transfer ownership of the real estate.
Quitclaim Deed vs Warranty Deed: Which is Better?
When purchasing a home, warranty deeds are the safer alternative. As a seller, you should anticipate that the majority of purchasers will request this option. Buyers require you to sign a warranty deed to ensure that you own the property. If it is discovered that the seller did not have full ownership of the property, the buyer has the right to sue for breach of warranty.
Also, keep in mind that this can happen in a variety of situations. This includes real estate transfers within a family – particularly an extended family. Even settings that appear to be intrinsically safe may not be. Therefore, you should utilize a warranty deed in any situation where you are unsure of your or someone else’s ownership stake in any property.
If you are transferring the property to your kid or a revocable trust arrangement as part of an estate plan, a quitclaim deed may be appropriate. It completes the transfer of ownership, but you do not provide any warranty related to the transaction.
In a Nutshell,
A warranty deed carries far more legal weight than a quitclaim deed. A warranty deed guarantees to the buyer that the seller owns the property in the good title. In contrast, a quitclaim deed provides no promises. A quitclaim deed simply states, “I surrender to you any interest I have in this property.”
If you are the buyer, the warranty deed is more advantageous because it gives stronger legal protection. If you are the seller, the quitclaim deed is preferable. This is because it provides the buyer with the least degree of protection while also being the most smooth method of transferring the property title.
Pay close attention to the paperwork when you buy, sell, or transfer ownership of a property to someone else. This involves understanding the type of deed on a property as well as the type of deed to employ when transferring your interest in a property to another person.
Special Warranty Deed Vs Quitclaim Deed vs Warranty Deed
There is a significant difference in the extent of legal protection provided by quitclaim deeds and warranty deeds. For transferring title to someone you know and trust, a quitclaim deed is sufficient. However, for the majority of property transfers, a warranty deed is the appropriate forum.
Warranty Deed
A warranty deed guarantees and protects the grantee (the person or entity receiving the property). When a property is transferred using a warranty deed, the grantor guarantees that there are no liens, encumbrances, or easements affecting the property. It also ensures the grantee that the grantor has a free and clear title to the property and can transfer that title to the grantee. A warranty deed covers the property’s whole history. If problems arise with the title after the transfer, the grantor must assist the grantee in defending its title to the property. Warranty deeds are most typically utilized in traditional property buy-sell transactions.
Special Warranty Deed
A special warranty deed is identical to a warranty deed. But in this case, the grantor only guarantees the property for the time that the grantor had it. If title concerns emerge before the grantor obtained title to the property, the grantor is not obligated to assist the Grantee in defending its claim.
Quitclaim Deed
A quitclaim deed, unlike a warranty deed or special warranty deed, offers no guarantees about the property. The Grantor does not guarantee that the title is clear; in fact, the Grantor does not even guarantee that he or she owns the land! The quitclaim deed is usually utilized only when the grantor and grantee have some connection or relationship. This is because a quitclaim deed is particularly dangerous for the grantee. For example, in a divorce, one spouse may deed the house to the other spouse. Quitclaim deeds are typically used to transfer real estate to a limited liability company (LLC) or a living trust.
If you are thinking about transferring property to an LLC or another person, you should consult with an experienced attorney. Not only is it critical to utilize the correct type of deed, but it is also critical that the deed be correctly filled out to avoid any potential title complications.
In Conclusion,
The type of deed to use is determined by the type of transaction and the level of protection desired. A quitclaim deed is excellent for instances involving just the transfer of ownership between parties that expressly trust one another and have no questions about the property’s title. Because of the protection it provides, a warranty deed should always be used in real estate transactions including financial transactions and mortgages. Because every case is unique, it is up to you to decide what type of protection you require and which deed will best protect you.
Warranty Deed vs Quitclaim Deed FAQs
Who benefits the most from a warranty deed?
The grantor benefits the most from a warranty deed.
Which is more important, title or deed?
The title and the deed are of equal importance.
How long is quitclaim deed good for in Arkansas?
In most states, the quitclaim deed can be contested for two years after the deed’s filing date. If either the grantor or the grantee want to question the legality of the quitclaim deed, they must do so during this time period.
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