A deed is a piece of legal document that records information about the transfer of real estate property from person/party to another. The deed has to be prepared and used regardless of who or how the property is being acquired.
The deed usually is one of two types: Warranty deed and a quit claim deed. If you want to buy a property and if you want to do it right, you will avoid a quit claim deed. A quitclaim deed is the weakest form of a deed. There are no guarantees when such a deed is involved. Therefore, if you are in the process of dealing with a property and the seller wants to use a quit claim deed, you should take a back-seat, as this is a definite deal-breaker. In short, you don’t want to get ownership using a quit claim deed.
Deed documents usually contain information such as the exact location and boundaries of the property, the names, and addresses of both the owner(s) and buyer(s), whether or not the seller is authorized to sell the property, and whether or not there are any third-party claims to the property. Most importantly, the deed must contain a clear statement to convey that the seller is transferring the property to the buyer.
As the name suggests, the warranty deed comes with a warranty by the seller that the contents and claims in the deed are correct. Any untrue information can be used to sue the seller to claim any damages that might arise because of the falsity. A quitclaim, on the other hand, does not guarantee the correctness of the claims contained in the deed.
Quit claims are usually used when there is not really a sale. Common examples include when a person wants to add a spouse to the title of the property after marriage or removes a spouse claim to the title after divorce, or when an heir gets the property in the event of the owner’s death. A third situation arises in cases where the property is on the lakefront. The owner may issue a warranty deed on the main structure of the property, but may issue a quit claim deed for the extended property as water borders change over time and may move up or recede leaving ownership of the property in ambiguity.
A quitclaim deed may be okay in the above-mentioned situations, but it is not a deed that should be used in regular property investment transactions. In such cases, you should stick to proper deeds that outline everything clearly and specifically to avoid any future problems and issues.