When one person is attempting to transfer or sell property to another, they will typically submit a deed that will act as legal transfers of ownership. This document serves as physical proof that a transfer occurred, backing up your assertion that someone sold or transferred your property. One common type of deed that is used to document this transfer is the quitclaim deed.
As the name implies, a quitclaim deed essentially states that one party is transferring their ownership to another party and no longer has recourse to claim that they own the property. They are quitting their ability to claim a property as their own. Sounds simple enough, and in the right situation it can certainly help to resolve potential defects associated with a title, but it’s not a perfect solution for all sales and property transfers. In today’s blog, we explore some of the potential downsides of a quitclaim deed transfer.
The Potential Problem With A Quitclaim Deed
Let’s cut right to the chase. A quitclaim deed isn’t always the best option for someone who is acquiring the property because it offers little in the form of protection for the purchaser. The quitclaim deed will resolve any claim to the property made by the named party in the quitclaim deed, but it can’t protect against other potential issues with a property. For example, let’s say that you are attempting to acquire farmland from a family, and the “owner” wants to use a quitclaim deed to transfer the title to you upon purchase. This quitclaim deed would resolve their interest in the property, but what if it turns out that a previous will outlined that the property was to be split amongst the surviving siblings? You may find that your sale is not valid and that the quitclaim deed doesn’t account for the ownership claims by other parties who have a rightful ownership interest in the property.
Because of this, a quitclaim deed is usually only recommended in specific instances, particularly in situations where no money is being transferred between parties. For example, a quitclaim deed may be more ideal for title transactions that:
-
Seek to exchange the transfer of a title between family members.
-
Transfer from an owner to a trust or a corporate entity (like a limited liability corporation).
-
Transfer ownership during a divorce as part of the division of assets.
Quitclaim deeds are more ideal for title transfers between friends, family members or trusted business entities, and they shouldn’t be used when there is significant money at play. At Commercial Partners, we can help determine the best way to safely transfer a title and uncover any potential title defects prior to closing so that there are no surprises afterwards.
For assistance with a title transfer or another aspect of commercial property acquisition, reach out to the team at Commercial Partners today at (612) 337-2470.