There are different types of deeds for the transfer of property from one entity to another. One such deed is a quit claim deed.
What is a Quit Claim Deed?
A quit claim deed is a simple one-page legal document used to transfer property ownership from one person to another without the exchange of money. The one transferring the property is known as the grantor. The one receiving the property is known as the grantee. Both names must appear on the deed.
The deed must also contain a legal description of the property. The grantor must sign the quit claim deed in the presence of a notary public who must then notarize the deed.
The quit claim deed is filed with the county recorder’s office, but there is no title search and no title insurance. The property is transferred as-is and the grantor makes no promise about whether he or she owns clear title to the property.
In What Situations are Quit Claim Deeds Most Commonly Used in Missouri?
There are some situations when quit claim deeds are commonly used to transfer property ownership in Missouri. Some examples are to transfer ownership:
- From an individual to that individual’s living trust or to a business LLC as the owner. The quit claim deed is generally not used for transferring property out of the trust or out of the business LLC ownership.
- As a gift to a family member.
- To a spouse to change the nature of the property from marital to separate property or to add the spouse to formerly separate property so it becomes marital property.
- To add someone on the deed who will be a joint owner with the current owner.
- To move ownership into a new name after a person has had a name change.
- To an ex-spouse as part of a divorce settlement agreement.
- Adding or deleting a specific person as an owner when the property is owned by a group.
What are the Pros of Using a Quit Claim Deed?
There are some good reasons for using a quit claim deed in the circumstances described:
- It is a simple process. Quit claim deeds are generally short and straightforward. They only need to include the name of the grantor, the name of the grantee, a description of the property, and must be notarized. Then filed in the County Recorder’s office.
- The simplicity makes it easy to transfer property among family members or to a living trust.
- They are legally binding documents.
- They are generally treated as gifts to family members and therefore there are no tax consequences as they are if the family purchased the property in a traditional real estate sale.
- Mortgages and tax liens are not transferred with the quit claim deed, so the grantor is still responsible for any money that is still owed on the property.
What are the Cons of Using a Quit Claim Deed?
Although the list of pros is longer than the list of cons, there is one big disadvantage of using a quit claim deed every grantee must be aware of:
- There is no title protection for the new owner. There may be third-party liens on the property or other title defects that will make it difficult for the grantee to make improvements to the property or even sell it.
- The property may not be owned free and clear by the grantor, or that there are no restrictions on the title or easements on the property. It is possible that the grantor has no ownership interest in the property the grantor is purportedly transferring.
- Traditional commercial mortgage lenders will not loan money on property where only a quit claim deed of ownership exists.
How Do You File a Quitclaim Deed?
Missouri law requires the quit claim deed to be filed in the county recorder’s office of the county where the property is located. It must contain the requisite information in the format required by the county for the recorder to accept the document for filing.
How an Attorney at Affordable Legal Services Can Help With Your Quit Claim Deed
Whether you are a grantor wanting to transfer ownership of property or a grantee expecting to receive ownership, consult with a real estate attorney to be sure that is the best way for the property to be transferred or whether a different type of deed would work better. Contact us at Affordable Legal Services to schedule a consultation.