What is a quit claim deed? It is a legal document that states an individual will transfer to another individual all interest, whether his ownership or financial interest, that he may have in a particular real property. Literally, the grantor will "quit" all his claims over interest in that particular real property and then transfer or grant these claims to another individual, known as the grantee.
Often misspelled and thought of as "a quick claim deed," a quit claim deed does not guarantee the grantee that the grantor actually has any real interest in the property, which is the subject of the deed. The grantor may not even be listed on the title of the property at all. On the contrary, grant deeds or warranty deeds are forms of legal documents generally used in real property sales that have guarantees for the grantee that the grantor indeed has a title on the property and has the right to transfer interests to the grantee.
The most common use of a quit claim deed is when a married couple is going through a divorce. Let's say a husband and wife have conjugal ownership of a house, but they are now divorcing. The couple decides that the house goes to the wife, and since it is a property owned by the couple, the husband would have to declare in the form of a quit claim deed that he is giving all his rights in the house to his wife. This will mean that he has quit all his interest in the property. Whatever his wife does to the house, he will not gain any monetary value from it even if his wife has sold it to someone else.
However, quit claim deeds do not eliminate one's liability on the real property. So, if the couple's house was under a mortgage in the husband's name, the husband will still remain liable for the payment of the mortgage even after the quit claim has been released. Even though the couple agreed that the wife will be the one to continue paying the mortgage, it is the husband's credit record that will be affected once the wife defaults on the payments. The deed of reconveyance will assure any party that the mortgage has been paid in full.
Another use of a quit claim deed is when someone would want to disown any claims of financial interest or ownership on a certain property that his spouse owns.
Quit claim deeds are also common in auctions when an auctioning body tries to get what is due to them out of a certain property. It declares no ownership interest on the real estate but states that the signator is trying to sell it in order to get the monetary amount that is due to them. An example would be in cases of a tax deed sale where a local government has monetary interest on a certain property because the owner has not been paying his property taxes. The government will try to sell the property at an auction but has to declare that it has no interest whatsoever on the property except to recover the back-taxes.
There are still many other uses of quit claim deeds, including property transfers between family members or business partners.
To conclude, one has to take extra measures when executing a quit claim deed alone, because it doesn't guarantee the grantee that the grantor has a valid real interest on the property that's the subject of the legal document.