A basic understanding of various real estate deeds, such as Quitclaim deeds and Warranty deeds, is essential when transferring title and ownership during a divorce.
What is a Real Estate Deed?
A real estate deed is a legal document that transfers an interest in real estate from one person to another. When real estate is sold or given to someone, it is done with a deed. The new owner receives their rights to the property and any title warranties transferred by the previous owner through the deed.
A deed requires an executing party (grantor/grantee, transferor/transferee), witnesses as signatories, and acknowledgments from a notary public. This makes it more valid and less rebuttable than other real estate documents.
Understanding the Quitclaim Deed
A quitclaim deed is a legal document used to transfer interest in real estate from one person or entity (grantor) to another (grantee). Unlike other deeds, it conveys only the interest the grantor has at the time of execution and does not guarantee ownership or clear title.
Without warranties, a quitclaim deed offers the grantee little protection if title issues arise. This makes it unsuitable for purchasing real estate from an unknown party but useful for conveying property between family members or spouses, commonly used in divorce proceedings or estate planning.
Title companies may require a quitclaim deed to clear up title issues before issuing title insurance. Lenders may also require a quitclaim deed to remove a spouse's interest in the property before funding a loan.
Common Uses for Quitclaim Deeds
- Real Estate Transfers Between Family Members: Easily transfer property between parents and children, siblings, and other closely related family members.
- Adding or Removing a Spouse from Title: Used to add or remove a spouse from the title after marriage or divorce.
- Transferring Real Estate to an LLC or Corporation: Often used for transferring property to closely related entities.
- Transferring Real Estate to a Trust: Common in family planning to transfer property into a trust for future generations.
- Removing a Cloud on Title for Title Insurance: Used to clear up potential title issues identified by title companies.
Understanding the Warranty Deed
Of all real estate deeds, general warranty deeds provide the most protection to the grantee (buyer). This deed guarantees that the grantor (seller) holds clear title and has the right to sell the property. The guarantee extends back to the property’s earliest title, unlike a special warranty deed which is limited to the grantor's ownership period.
Warranty deeds also include references to any easements, restrictions, or agreements related to the land, ensuring the grantee is aware of any limitations and upholding the covenant against encumbrances.
Need Help Choosing Between a Quitclaim Deed and a Warranty Deed? Contact a CDLP® Today!
Determining whether to use a Quitclaim deed or a Warranty deed in a divorce situation depends on the individual circumstances. Understanding the risks and protections of each type should be discussed with your attorney. For expert advice, contact a Certified Divorce Lending Professional (CDLP®).
This is for informational purposes only and not for the purpose of providing legal or tax advice. This information is directed towards the professional divorce team and not the consumer directly. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations.
Always work with a Certified Divorce Lending Professional (CDLP®) when going through a divorce and real estate or mortgage financing is present.
Copyright 2020 Divorce Lending Association. No portion of this post may be reproduced without the written consent of the Divorce Lending Association.
