What is a Quitclaim Deed? 

A quitclaim deed is a legal document used to transfer ownership of property from one person to another. Unlike other types of title transfers, the process of using a quitclaim deed doesn’t require extensive paperwork or seemingly complicated legal procedures. That’s why it is sometimes used in straightforward title transfers such as doing a transaction with a trusted relative. At face value, it may sound like a quick solution for transferring titles, mainly because of its simplicity. It offers a straightforward approach, making it an attractive option for homebuyers looking for a hassle-free transfer of property. 

However, the surface benefits of a quitclaim deed are deceiving. In reality, the ability of the quitclaim deed to cut out the red tape is a double-edged sword. The steps the deed skips are the very things designed to protect the new owner! Suddenly, our earlier example of a straightforward transaction with a trusted relative isn’t so simple. If the original ownership is called into question, it could end in disaster for you. In effect, the quitclaim deed leads to unforeseen problems and potential disputes down the line. Let’s take a closer look at these issues. 

3 Red Flags of Quitclaim Deeds 

1. Lack of Guarantee and Legal Protections 

Using a quitclaim deed means accepting uncertainties about the ownership and limited legal protections. Unlike other warranty deeds or other policies, a quitclaim deed does not offer warranties or guarantees for the property title and instead transfers the property “as is.” This means the recipient of the property may not have any legal recourse if issues or disputes arise regarding the title’s validity. Thus, due diligence plays an important role in such transfers, which brings us to our next issue… 

2. Inadequate Due Diligence 

Due diligence plays a crucial role in any property transaction. Unfortunately, a quitclaim deed does not provide sufficient information about the property’s history. This means they do not have the benefit of having a title expert to conduct thorough research about the property’s potential problems, such as unpaid taxes, boundary disputes, or undisclosed restrictions. 

Using a quitclaim deed could put you at risk of facing overwhelming, and potentially expensive problems down the line.

3. Limited Recourse and Legal Remedies 

In the event of a dispute, there are limited recourse and legal remedies available. If issues arise after the transfer, resolving them can be challenging and may involve a lengthy and costly legal process. This is because the lack of warranties and guarantees in a quitclaim deed leaves the recipient responsible for any financial and legal consequences resulting from undisclosed problems or disputes. 

The Role of a Professional Title Company 

Using a quitclaim deed is risky. There is a better way. Seeking the assistance of a professional title company like Millennial Title means working with experienced professionals. They’ll guarantee a smooth transfer process by conducting thorough research, identifying potential issues, and providing the necessary legal protections so you have peace of mind. 

Trust Perpetual Title to Have Your Interests at Heart 

While a quitclaim deed may seem like a convenient option for transferring property titles, the dangers involved can lead to significant problems in the future. When you choose a title company like Perpetual Title, you ensure a secure and reliable transaction.  

Don’t take unnecessary risks with your property transfer—opt for the safeguards and assistance only a title company can provide. Reach out to Perpetual Title today to learn more about our professional services and how we can help you navigate the complexities of the title transfer process. 

The post The Dangers of Using a Quitclaim Deed first appeared on Perpetual Title.

What is a Warranty Deed?

When a property is sold, a warranty deed is a legal document that is used to transfer ownership of the property from the seller to the buyer. A warranty deed, provided by the seller, guarantees to the buyer that the property is owned by the seller, free and clear of any title defects, and does not have any outstanding debts, including mortgages. This document is issued as part of the title search and includes details such as the address, description of the property, information about the parties involved, and the date of the transaction.

Understanding Deeds of Trust and Mortgages

A Mortgage is an instrument pledging real property for a loan. This is a two-party instrument: The mortgagor (debtor) grants the mortgage to the mortgagee (lender). A mortgage explains the details of the loan including the principal balance, maturity date, and interest rate information. Mortgages can be foreclosed judicially or nonjudicially, though they are usually foreclosed judicially.

Deed of Trust is a three-party instrument: The grantor (debtor, mortgagor) gives Deed of Trust to a trustee as security for a debt owed to the beneficiary (a.k.a lender, mortgagee). Like a mortgage loan agreement, the deed of trust explains the details of the loan including the principal balance, maturity date, and interest rate information. The trustee is given the power of sale allowing the trustee to foreclose nonjudicially.

With a deed of trust or a mortgage, they can only be released after satisfaction by the beneficiary or mortgagee. However, a few states have granted the power to release to the trustee.

This map shows where a deed of trust, mortgage loan, or both are accepted.

Deed of Trust, Mortgage, and Warranty Deed: Key Difference

Depending on where you are purchasing a home, you may encounter one or all these documents, however, each of them plays an integral role in the home buying process with vastly different purposes.

A deed of trust or mortgage only secures that Promissory Note of the lender against the property. A warranty deed conveys the legal title to the buyer and warrants that a property is owned and able to be sold without any encumbrances and liens. A warranty deed is only used in a purchase transaction whereas a deed of trust and mortgage can be used in a purchase or refinance.

If you have additional questions regarding warranty deeds, deeds of trust, mortgages, or any other paperwork associated with the home buying and selling process, contact the team at Perpetual Title today.

The post Deed of Trust, Mortgage, and Warranty Deed: What’s the Difference? first appeared on Perpetual Title.