Whether you are planning to buy a property, sell your property, or if you are simply looking to transfer your property into the name of a business or trust, the key document that will be executed and recorded into the public record to accomplish this is a deed. In general, a deed serves the purpose of transferring title from one individual or entity to another. There are a few different types of deeds available for use, but by far the most common of them are the Warranty Deed and the Quitclaim Deed. The term “deed” is often thrown around by parties, and occasionally, Warranty Deed and Quitclaim Deed are used interchangeably. The purpose of this article is to define the two, state when they should be used, and finally, to outline the advantages and disadvantages that come with their usage.
What is the difference between Warranty Deed and a Quitclaim Deed?
As stated previously, in either a Warranty Deed or a Quitcliam Deed, title is effectively transferred to the grantee (buyer or new owner), while the grantor (seller or current owner) surrenders all claim that he/she has in the property. The between the two lies in the guarantees and warranties that the grantor is providing to the grantee within said deed. In a Quitcliam Deed, the grantor simply quits any claim that he/she has in title and offers no guarantees or warranties to the grantee as to the status of title. On the other hand, in a Warranty Deed, the grantor guarantees and warrants to the grantee that the title being transferred is unencumbered and is otherwise free and clear of any title defects.
When Are Warranty and Quitclaim Deeds Used?
In a typical Florida real estate closing, the buyer and seller go through a formal process with a title company that issues title insurance to the buyer. A Warranty Deed is most appropriate in this case since the title company reviews the title and works with the seller to cure any defects before closing. Because due diligence is performed to ensure clear title, the buyer has confidence that the property is free from encumbrances, and the seller has reduced risk of misrepresenting ownership.
When Is a Quitclaim Deed the Better Option?
A Quitclaim Deed may be the better choice when there is no title search, when the parties already know and trust each other, or when the deed is simply correcting an error on a prior document. In these situations, the seller does not provide guarantees about the condition of title, and both parties accept that limited assurance. Sellers should be cautious about granting a Warranty Deed outside a formal closing, as it can expose them to potential liability if any title defects are later discovered.
In short, the type of deed you should use at your closing or other property transfer will be dependent upon your circumstances. If you have any questions about this topic, please do not hesitate to reach out to your local trusted real estate attorney.
