When you sell or buy real property, the transfer of that property is executed through a deed. A deed is basically a legal instrument that assigns ownership of the property to a person or entity. Note, deeds are different than title- title is the ownership of rights to property (also known as an interest in the property), and you may have full or partial interest. Deeds are the documents that transfer title between persons or entities. There are many different types of deeds, but the most popular ones are grant deeds and quitclaim deeds.
So what is the difference between grant deeds and quitclaim deeds?
A grant deed (also referred to as a “warranty deed”) is the most preferable deed for a buyer. Grant deeds transfer the property with a guarantee that the buyer will not be responsible for any unknown ownership claims that may be brought in the future. Rather, the seller will be responsible in the event a claim is made to the property. Grant deeds warranty that the seller is conveying the property with “marketable title,” meaning title that is free and clear of other claims or encumbrances.
In contrast, a quitclaim deed does not contain any guarantee against future ownership claims. It only conveys the interest that the seller has, as is, regardless of unknown ownership claims. A quitclaim deed makes it clear to the buyer that the seller makes no claims about marketable title. We see quitclaim deeds used when property is being transferred from two joint owners to one. Such practice often occurs with families (e.g., spouses or other relatives) transferring ownership, or when a property owner is transferring her property to her trust. When a quitclaim deed is being used, we recommend using an escrow company and purchasing title insurance. Title insurance will protect the buyer from unknown future claims of ownership. If you are taking out a mortgage loan to purchase your property, your lender will likely require a loan policy of title insurance so that the lender is protected until your loan is paid off or refinanced. Otherwise you can take out an owner’s policy of title insurance, which will last as long as you own your property.
Regardless of the type of deed you have, we recommend filing the deed at the county recorder’s office. This will help to avoid ownership disputes in the future. The attorneys at Schorr Law have experience with all types of deeds, and can assist you with any dispute arising from grant deeds and quitclaim deeds, real estate transactions, including commercial and residential matters. Call us to see if you qualify for a free consultation!
See related: The Difference Between a Void and Voidable Deed