When selling or purchasing a home, there are many different things to consider. A home's price, size and age are all factors home buyers look into before committing to purchase a home. The particular type of deed being offered during the sale of the home should be no less important. For many people, however, this does not even become a consideration. While it can mostly be chalked up to lack of knowledge on a buyer's part, that doesn't mean it shouldn't be looked into just as carefully as other factors that contribute toward your decision to purchase a home.
What Are the Obligations of Different Types of Deeds?
Different deeds come with different obligations to the original seller. Some absolve a seller of all or nearly all liability or responsibility after the home contract has been signed. If you are a buyer and the house is an older one with the potential for problems in the near future, this is not an ideal deed for you to obtain in most instances. Some deeds, on the other hand, offer more warranties and guarantees with which the seller must comply.
When Should You Use a Quitclaim Deed?
A quitclaim deed is thus the term describing a legal document where the home seller, or grantor, repudiates any interest in the property he or she once owned to the buyer, or grantee. More common deeds used to transfer ownership of real estate are grant deeds or warranty deeds. Quitclaim deeds, on the other hand, are more commonly used by family members transferring property between one another.
Another common use for a quitclaim deed exists when a divorce occurs. If a husband, for example, has agreed that his former wife can have their shared home, he could grant her a quitclaim deed. This would disclaim any interest he had in the property, transferring it solely to his former wife.
How to Approach Using a Quitclaim Deed
Quitclaim deeds are consequently one of the most basic of ways to officially transfer the title of your property. As a seller, you are less likely to incur any liability by executing a quitclaim deed. This is obviously not ideal for a buyer who will want some guarantees and warranties included in the deed, particularly if the home is older or not in pristine condition. Consulting a real estate agent and explaining your individual needs is a great way to ensure the most appropriate deed is executed for you as either a buyer or a seller.
How Sellers and Buyers Can Protect Themselves When Using a Quitclaim Deed
Quitclaim deeds provide less protection than other types of deeds. There is no warranty attached to this sort of deed. Additionally, a quitclaim deed has no effect on any mortgages that may be on the property. Because of this, care must be taken by all parties to protect themselves.
The grantor, the party transferring the property, should ensure that there is no due-on-sale clause in their mortgage, if they have one. When this sort of clause is present, any balance on the mortgage must be paid when the property is transferred.
The grantee, who is the person who is receiving the property, should do their own research to make sure that there are no other claims to the property.
Most importantly, it is vital not to transfer a property via a quitclaim deed unless it is between people who know and trust each other. Because of the lack of protection, a quitclaim deed should only be used by people who know and trust each other well.
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