Quit Claim Deed vs Warranty Deed: Which Should You Use?

Quit Claim Deed vs Warranty Deed

When real property changes hands, the deed used to transfer ownership determines the level of protection the new owner receives. The two most common types of deeds in the United States are the Quit Claim Deed and the Warranty Deed. They accomplish the same basic function, transferring an interest in real property from one party to another, but the guarantees they provide could not be more different. Choosing the wrong deed can leave a buyer without legal recourse if title problems surface later. This guide explains the differences in detail.

What Is a Quit Claim Deed?

A Quit Claim Deed transfers whatever interest the grantor has in a property to the grantee, without making any promises about what that interest actually is. The grantor does not guarantee that they own the property, that the title is clear of liens or encumbrances, or that no other party has a competing claim. The grantor simply says, in effect, whatever I have, I give to you.

If the grantor has full ownership and clear title, the grantee receives full ownership and clear title. If the grantor has no interest at all, the grantee receives nothing, and the deed is still legally valid. The quit claim deed transfers the interest as it exists, without any warranty.

Quit Claim Deeds are also sometimes called Quitclaim Deeds or, incorrectly, Quick Claim Deeds. Despite the common misnomer, the name has nothing to do with speed. It derives from the grantor quitting or relinquishing their claim to the property.

What Is a Warranty Deed?

A Warranty Deed transfers ownership of real property from the grantor to the grantee with a set of legally binding guarantees known as covenants of title. These covenants protect the grantee by ensuring that the grantor actually owns the property, has the legal right to convey it, and will defend the grantee against any claims that arise from the grantor's period of ownership or before.

The traditional covenants included in a General Warranty Deed are:

• Covenant of Seisin: The grantor warrants that they own the property and have the right to convey it.\n- Covenant of Right to Convey: The grantor warrants that they have the legal authority to transfer the property.\n- Covenant Against Encumbrances: The grantor warrants that the property is free from liens, easements, or other encumbrances, except those specifically disclosed in the deed.\n- Covenant of Quiet Enjoyment: The grantor warrants that the grantee will not be disturbed in their possession of the property by someone with a superior claim.\n- Covenant of Warranty: The grantor promises to defend the grantee against any lawful claims to the property.\n- Covenant of Further Assurances: The grantor agrees to execute any additional documents necessary to perfect the grantee's title.

Key Differences

Title Guarantees

This is the fundamental distinction. A Warranty Deed guarantees that the title is good. If a title defect emerges, whether it is a previously undisclosed lien, a boundary dispute, a forged deed in the chain of title, or an undisclosed heir with a claim, the grantor is legally responsible. The grantee can sue the grantor for breach of the covenants and recover damages.

A Quit Claim Deed provides zero title guarantees. If a title defect emerges, the grantee has no legal claim against the grantor based on the deed. The grantee's only recourse is title insurance, if they purchased it, or a separate legal action against whatever party created the defect.

Grantor and Grantee Protections

A Warranty Deed protects the grantee extensively. The covenants are legally enforceable promises that give the grantee a direct cause of action against the grantor if anything goes wrong with the title. This makes the Warranty Deed the gold standard for arm's-length real estate transactions.

A Quit Claim Deed protects the grantor. Because the grantor makes no promises, they cannot be held liable for title defects. This makes the Quit Claim Deed attractive when the grantor is uncertain about the state of the title or when the parties have a relationship of trust that makes formal guarantees unnecessary.

General vs Special Warranty Deed

It is important to distinguish between a General Warranty Deed and a Special Warranty Deed, also called a Limited Warranty Deed in some states. A General Warranty Deed covers all title defects, regardless of when they arose, even those that predate the grantor's ownership. A Special Warranty Deed covers only title defects that arose during the grantor's period of ownership. Defects that existed before the grantor acquired the property are not covered.

Special Warranty Deeds are common in commercial transactions, foreclosure sales, and transfers by fiduciaries such as executors or trustees. The grantor is willing to stand behind their own ownership but not the entire history of the property.

When to Use Each

Use a Quit Claim Deed When:

• Transferring property between family members, such as a parent conveying a home to a child\n- Transferring property between spouses as part of a divorce settlement\n- Adding or removing a spouse from the title after marriage or divorce\n- Transferring property into a living trust or from a trust back to the grantor\n- Clearing up a cloud on the title, such as a misspelled name in a prior deed\n- Conveying property where both parties know the title status and trust each other\n- Transferring property as a gift where no purchase price is being paid

Use a Warranty Deed When:

• Selling property in an arm's-length transaction between unrelated parties\n- The buyer is paying fair market value and expects full title protection\n- A mortgage lender requires a warranty deed as a condition of financing\n- The transaction involves property with a complex chain of title\n- The buyer wants the ability to sue the seller if title problems arise

Title Insurance Implications

Title insurance protects the property owner against losses from title defects, liens, and other problems that a title search did not uncover. Whether you use a Quit Claim Deed or a Warranty Deed, title insurance is available, but its importance changes depending on the deed type.

With a Warranty Deed, the buyer has two layers of protection: the grantor's covenants and the title insurance policy. If a problem arises, the buyer can pursue either remedy.

With a Quit Claim Deed, title insurance is the buyer's only protection. Many title insurance companies are reluctant to issue policies on properties transferred by Quit Claim Deed, or they may charge higher premiums, because the use of a quit claim deed can signal that the grantor is uncertain about their ownership. In some cases, a title company will require a quiet title action before issuing a policy.

Recording Requirements

Both Quit Claim Deeds and Warranty Deeds must be recorded with the county recorder's office, also known as the register of deeds or county clerk, in the county where the property is located. Recording provides constructive notice to the world that ownership has changed. An unrecorded deed is still valid between the grantor and grantee, but it may not be enforceable against a subsequent bona fide purchaser who records first.

Recording requirements vary by state but generally include the names and addresses of the grantor and grantee, a legal description of the property, the signature of the grantor, notarization, and payment of recording fees and any applicable transfer taxes. Some states require witnesses in addition to notarization.

Common Mistakes

• Using a Quit Claim Deed in an arm's-length sale, leaving the buyer with no title guarantees\n- Assuming a Warranty Deed eliminates the need for title insurance, which is not the case because the grantor may be judgment-proof or deceased when a claim arises\n- Using a Quit Claim Deed to add someone to the title without understanding that it may affect the homestead exemption, property tax reassessment, or existing mortgage due-on-sale clause\n- Failing to record the deed, which can create priority disputes with subsequent purchasers or creditors\n- Confusing a Quit Claim Deed with a deed that transfers no ownership, when in fact it transfers whatever the grantor has

Summary

The Warranty Deed and the Quit Claim Deed serve different purposes and offer vastly different protections. Use a Warranty Deed when you need to guarantee clean title, especially in sales between unrelated parties. Use a Quit Claim Deed when you are transferring property between trusted parties and the grantor's title guarantees are not necessary. In any significant real estate transaction, consult a real estate attorney and obtain title insurance to protect against risks that no deed alone can eliminate.