A quitclaim deed, often mistakenly referred to as a “quick claim deed”, is a popular option for homeowners and non-real estate attorneys when transferring ownership to a Florida residential property. However, sometimes, a conveyance using a quitclaim deed rather than a warranty deed can do more than just transfer the ownership of the property. Parties often don’t know that a quitclaim deed can negatively affect existing title insurance coverage.
At the purchase of the property, a homeowner most likely received a warranty deed transferring ownership and an owner’s title policy as a part of that closing. The owner’s title policy protects that new homeowner from any title defects or claims to the property that may come out of the woodwork that were not discovered during the title search.
A quitclaim deed may violate the continuation of coverage condition in most owner’s title insurance policies. These policies usually include a continuation of coverage condition that the coverage under the policy shall remain in full force as long as the Insured owner (i) retains an interest in the property, (ii) holds a purchase money mortgage for the purchase of the property, or (iii) is liable by reason of warranties in any transfer or conveyance of title to the property. In English, this means the owner (i) still owns the property, (ii) holds a seller financing mortgage on the property as part of the purchase by the new owner, or (iii) has transferred the property using a warranty deed making the owner liable to the new owner/grantee. With a quitclaim deed there are no remaining warranty liabilities of the seller/grantor, so the existing owner’s insurance policy will no longer be effective.
People think of a quitclaim deed as the easiest and quickest option for conveying the property which is not true. A warranty deed takes the same amount of time. The quitclaim deed may be perceived to be easier because the person conveying the property transfers it over to the new owner without making any representations about the condition of title or ownership. With a quitclaim deed, the grantor (person giving the property) is not even guaranteeing that he or she has the right to transfer the property or that the grantor is the rightful owner! The quitclaim deed merely transfers whatever right the grantor has at that time, if any, to the grantee (the person or entity the property is being transferred to).
So, before transferring a property using a “quick claim deed” slow down and talk to your local real estate attorney.
Berlin Patten Ebling, PLLC
Article Authored by Kelly Roberts, Esq. firstname.lastname@example.org
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