Whenever someone transfers their ownership interest in real property to someone else, whether as a gift or via a purchase and sale transaction, they use some type of deed to effectuate the transfer. The person receiving the ownership interest is the property’s “grantee”. The person who transfers their ownership interest (i.e., title) is called the “grantor”.
Florida recognizes different types of deeds for real estate transactions and title transfers. Some of these deed types include general warranty deeds, special warranty deeds, and quitclaim deeds. Like other types of deeds, quitclaim deeds have advantages and disadvantages, so it is crucial to understand what is involved with a title transfer via a quitclaim deed before deciding to use one.
What Are the Disadvantages of a Quit Claim Deed? – An Introduction
In essence, deeds are legal documents used to transfer ownership (i.e., title) of real property from one individual or entity to another. These documents are physical proof that the transfer occurred. Once the deed is recorded with the county clerk, the world is put on notice of the change of ownership.
Additionally, deeds contain specific terms regarding the guaranties that the current property owner makes to the grantee. Different types of deeds contain distinct promises regarding the ownership rights and marketability of the title that is being conveyed.
Accordingly, the level of warranty promised by the grantor in the deed is the essence of the deed. If the grantor (person transferring ownership of the property) breaks a promise outlined in the deed, the new owner (grantee) may have grounds to seek legal recourse.
General Warranty Deed vs. Quitclaim Deed – Understanding the Difference
In Florida, the most common types of deeds used to transfer ownership interest in a property are general warranty deeds and quitclaim deeds. General warranty deeds are typically used during a standard purchase and sale transaction, as the parties do not know one another.
A general warranty deed provides the buyer with the most guaranties as to the quality of the title being transferred. If one of the promises made by the seller is untrue—such as being the rightful owner of the property, having the right to transfer it, providing clear title free of liens and encumbrances, etc.—the buyer of the property will often have legal recourse against the seller.
On the other hand, quitclaim deeds do not contain covenants of title. As its name suggests, the grantor uses the quitclaim deed to literally quit his or her claim to the property, no matter what that interest might be—or whether it is even valid. The grantor transfers any interest they may have in the property, but they do not provide any guaranties on the title’s quality or even whether that they have a legitimate interest in the property.
What Are the Disadvantages of a Quitclaim Deed? – The Verdict
Ultimately, the main problem with quitclaim deeds is their lack of any guaranty on the part of the person transferring their ownership interest in the property. With a quitclaim deed, the grantor only states that they are transferring any interest they may have in the property–whatever that interest may be. This type of deed provides the grantee with the least amount of protection.
Although Florida law has specific regulations for quitclaim deeds, the language used in the document produces the same effect—the deed does not guarantee clear title for the new owner.
Consequently, if a third party has claims to the property and proves the grantor had inferior rights to the property’s title, the quitclaim deeds does not permit the new owner to file a lawsuit against the grantor. In effect, the previous owner is free from liability.
Note that the grantee can still sue the grantor for instances of fraud or forgery. Moreover, there is nothing stopping a grantee from proceeding with a detailed title search to detect title defects prior to the transfer.
As a result of the lack of guaranties being provided, a quitclaim deed is often best for situations where no money is being exchanged for the transfer of title, such as a transfer of title between family members, from an owner to their own trust or corporate entity (such as a limited liability company or corporation), or in the circumstance of a divorce.
Is a Quitclaim Deed Right for You? – Consult with an Expert Attorney to Find Out
Quitclaim Deeds are commonly used for transfers between relatives, friends, or trusted business partners. However, it is always advisable to seek professional legal help to protect your interests and minimize your risks. Furthermore, it is important to work with an experienced Florida real estate attorney who can prepare the quitclaim deed in compliance with Florida law. Farshchian Law, P.A. has a team of Florida real estate professionals with expertise in all sorts of property transactions and deed and title transfers.
To learn more or to schedule a free consultation, contact us by calling (800) 604-1871 or email us via our Secure Contact Form. We provide closing, real estate, and title and deed transfer services throughout the State of Florida.