What is a Quitclaim Deed?
In most cases, when you purchase real estate in California you will receive a grant deed (in most states called a warranty deed). Typically, this type of deed offers the best protection against title defects and it is standard procedure to issue a grant deed in typical real estate transactions in California. However, in certain cases, a real estate transfer can involve something called a quitclaim deed.
A quitclaim deed is generally used to quickly transfer property between owners. There are a variety of reasons you might want to do this, but one example involving quitclaim deeds is a real estate transaction between family members. The major difference between a quitclaim deed and a grant (or warranty) deed is that a quitclaim deed does not protect you against title defects. Therefore, consultation with an experienced real estate attorney would be advised before utilizing a quitclaim deed to complete your transaction.
Some people mistakenly believe that the deed and mortgage on the property are somehow intertwined. In reality, neither a quitclaim deed nor a grant deed gives the recipient the right to assume the loan – they are actually entirely separate. If title to property is transferred without paying off the loan secured by a trust deed, the loan remains in the name of the borrower(s) and the “due on sale” clause contained in almost every loan gives the lender the right to accelerate the loan and call it due upon any transfer of title to the property. A trust deed does not affect ownership of the property; only a deed does that.
Due to this misconception, there’s a prevalent myth involving quitclaim deeds and private purchases of real estate. Not only can they not be used to transfer both ownership and the loan to another person, but they can actually cause quite a complication if you attempt this type of transfer in order to purchase or sell a home, primarily because of the “due on sale” clause.
In short, there are certainly cases in which a quitclaim deed is a safe and legally sound way to transfer real estate. Quitclaim deeds are not, however, a vehicle for transferring a loan along with title to property. Since a complicated legal maneuver like this could easily backfire on the transferor if it is misused, always consult with a real estate attorney for guidance on your unique situation.