Quitclaim Deeds are often used to transfer property between family and friends, but are they the best option for you?
What you will discover:
Is there a strong bond between the parties or family members?
Do you wish to make a change to an already registered deed?
Do you wish to know who owns the property?
Do state laws regard Quitclaim Deeds differently?
Is there a tax penalty for giving property?
A Quitclaim Deed is a straightforward real estate legal instrument used to transfer property rights, most often between family members. You may wish to read about your alternatives and the legal requirements before deciding on a Quitclaim Deed.
Table of Contents
Is there a strong bond between the parties or family members?
A Quitclaim Deed is often used to transfer property between parties who are acquainted and have a long-standing connection. A Quitclaim Deed, unlike a Warranty Deed, does not offer the new owner with any assurances or warranties that the seller owns the property or has the power to sell the property, nor does it ensure that the property is free of mortgages.
Due to the absence of guarantees associated with signing a Quitclaim Deed, it is often used to transfer title between family members, spouses or ex-spouses after a divorce, between a trust owner and the trust, or between other persons who have a long standing and trusted relationship.
Do you wish to make a change to an already registered deed?
A Quitclaim Deed is often used to rectify errors or clarify information in previously recorded deeds. Minor discrepancies that are not resolved might pose complications when a property owner tries to sell the property unless a deed is written that explains or corrects the contradictory facts.
Do you wish to know who owns the property?
Another typical purpose for utilizing a Quitclaim Deed is to explain tenancy (how the parties own the property) amongst the property owners. In the event that one of the property owners dies, utilizing a Quitclaim Deed to clarify tenancy might save time and money. For example, if a husband and wife discover that the present deed does not indicate tenancy, they may seek to change the deed so that the other spouse automatically gets the whole property if one of them dies. Most states presume that if no express declaration is made, the property is owned as tenants in common. The majority of couples or family members want to own property as joint tenants with survivorship rights. This permits the property to transfer to the remaining owners without the need for a costly probate if one of the property owners dies.
Do state laws regard Quitclaim Deeds differently?
There are several state peculiarities when it comes to transferring an after-acquired title. Some states permit the use of a Quitclaim Deed to transfer an after-acquired title. However, in most states, a Quitclaim Deed only conveys the seller’s interest at the moment the deed was signed. Generally, any interest in the property acquired after the Quitclaim Deed is signed does not transfer to the buyer.
Is there a tax penalty for giving property?
Gifting property may have tax implications. The individual making the gift may be required to file a gift tax return and may be liable for gift tax if the fair market value of the property exceeds the yearly gift tax exclusion level. Furthermore, the individual receiving the gift may be liable for any relevant state or municipal transfer taxes. It is a good idea to consult with a tax professional to ensure that your tax return complies with current tax rules.
