What is a quitclaim deed?

Defining quitclaim deeds

The Legal Information Institute at Cornell Law School says a quitclaim deed is a "document by which a grantor conveys his or her present interest, if any, in a given parcel of real property to a grantee without representing, covenanting, or warranting that the title is good."

To put that in simpler terms, Eric Bramlett of Bramlett Residential in Austin, Texas, explains that a quitclaim deed is like handing over the keys to a home to another person and saying the property and everything in it is now theirs. The person quitting their claim is also saying they take no responsibility for title issues or legal claims against the property.

However, transferring ownership does not end the original owner’s legal responsibility in terms of mortgage liability and payments. If the mortgage is not paid off, there will also need to be a legal transfer of the mortgage.

» MORE: Mortgage vs. deed of trust

When to use a quitclaim deed

A quitclaim deed offers the least amount of protection for the person receiving the property. Transfer of ownership using a quitclaim deed is essentially considered "as is," so the homebuyer cannot even obtain title insurance in most cases.

For that reason, quitclaim deeds are usually not recommended. However, they can make sense in the following scenarios:

How to file a quitclaim deed

Where you get a quitclaim deed form can vary based on the state you live in, but your county clerk's office is a good place to start, said Bramlett.

From there, the quitclaim deed form can be filled out by the property owner with or without the help of an attorney, and each state and county has a unique set of fees that must be paid to execute the transfer. Either way, the quitclaim deed form must be signed by interested parties and notarized before it can be used for the official transfer of ownership.

According to LegalZoom, the quitclaim deed form must include:

• A legal description of the property
• The county where it is located
• The name of the person transferring the property (grantor)
• The name of the person receiving the property (grantee)
• The date of the property transfer
• A record of any money exchanged in the transaction (if applicable)

It will then be filed with the local county recorder's office so that it becomes part of the public record.

"This allows potential buyers and lenders to easily identify who owns the property and any financial obligations associated with it," said Spinelli.

Penalty for falsifying a quitclaim deed

Because quitclaim deeds are used for the transfer of something as expensive as real estate, it's not surprising that fraud can take place before or during these transactions.

For example, the U.S. Bureau of Justice Assistance notes that quitclaim deeds are often used in instances of elder abuse against aging homeowners who may not realize they are signing away rights to their property. Many quitclaim deed scams also involve real estate transfers from deceased individuals and for homes that have been permanently or temporarily abandoned.

The penalties for forging or falsifying a quitclaim deed can vary depending on state laws and specific details about the fraud. Examples of state penalties include:

• California: Falsifying a quitclaim deed can lead to substantial fines and up to three years in prison. An additional one to four years in prison can apply if the victim of the crime sustains losses of more than $65,000, and an additional one to five years can be added to the sentence in instances of losses of $100,000 or more or when someone is convicted of two or more felony-level fraud charges at the same time.
• Florida: Forgery of a house deed, checks, wills and other documents is considered a third-degree felony. Penalties can include up to five years in prison, up to $5,000 in fines and five years of probation.
• Michigan: Penalties for falsifying a property deed can include conviction of a felony offense and imprisonment up to 14 years.

» MORE: How to avoid mortgage refinance scams

Other types of deeds

There are three main types of deeds used for the transfer of real estate ownership, including the quitclaim deed. Here are the other two:

General warranty deed

A general warranty deed is used to transfer real estate property ownership from one party to another with the most amount of protection for buyers already built in. That's because general warranty deeds make a promise to the buyer that the seller of a home owns the property without any liens or encumbrances in place.

A general warranty deed also promises that, if liens or creditor's claims are found in the future, the seller will financially compensate the buyer for them.

Special warranty deed

A special warranty deed is more robust than a quitclaim deed but offers less protection for buyers than the general warranty deed. This type of deed promises no title issues or liens on the property while in the possession of the current owner, but it makes no guarantees about title issues or claims that came into existence before they owned it.

» MORE: Warranty deed vs quitclaim deed

Bottom line

Using a quitclaim deed to transfer real estate ownership only makes sense in certain situations, such as real estate transfers between family members and instances of divorce or marriage.

With that in mind, buyers should be cautious about accepting a quitclaim deed for real estate transfers. In every other scenario, a general warranty deed gives buyers the optimal amount of protection they need against future claims against their home.