Real estate transactions are required to be in writing. The most common way to transfer ownership of real property is to execute a deed. A deed contains the names of the old and new owners and a legal description of the property. There are many kinds of deeds, but the ones that frequently pass through our offices are warranty deeds and quitclaim deeds. Both types of deeds effectively transfer real property, but they have significant differences that you should be aware of.
A warranty deed guarantees the seller’s good title before and after the conveyance of real property. Typically, this means that: (1) the seller has good title; (2) the seller is legally allowed to sell the property; (3) the property is free of certain encumbrances; (4) the buyer has the right of possession against all others; and (5) the seller is responsible for any problems with the title. A warranty deed, in effect, protects the buyer from possible issues with the property.
A quit claim deed contains no warranties and conveys the interest, if any, held by the seller. This type of deed is often used when a property transfers ownership without being sold. A quit claim deed merely conveys whatever legal interest a party has in a property; therefore, transfer by a person who doesn’t actually own the property will not result in any liability for damages. Because a quit claim deed offers no warranties, it is best used for property transfers between family members or friends.
If you are in the process of transferring a piece of real estate, consult a qualified attorney who can review your situation and help you determine which type of transfer is best suited for your situation.
Contributed by MH Phoenix Estate Planning Attorney Darren L. Richardson.
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This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.