Q: What is a "Quick Claim" Deed?
A: A Quit Claim Deed is way to transfer property with no warranties.
Actually, there is no such thing (at least in Florida) as a "quick-claim" deed, and I hate that name. Mostly, I hate that people call the "quit claim deed" a "quick claim" because it implies that these types of deeds are somehow quicker or cheaper to do. They are not. They cost exactly the same to prepare and to record. In fact, they could end up being much more expensive, as I will explain below. You are not alone in your confusion. Many lawyers who do not practice real estate law (and shockingly, some who do) have no idea what the purpose of a quit claim deed is. I will often hear a colleague or read advice from an attorney telling a person to “just do a quit claim”. Most of the time, they couldn’t be more wrong. There are specific legal situations where the answer is to use a Quit claim Deed, but those situations are very limited. I cannot think of any reason to use them in a typical purchase/sale transaction or even a gift of property between family members.
There are, basically, three types of deeds that are commonly used to transfer property between parties: Warranty Deed, Special Warranty Deed, and Quit Claim Deed. The only difference, other than the language, is what is being promised. When a seller gives a Warranty Deed, it is just like getting a warranty on that new iPhone (or in my case, the much-better-than-an-iPhone Samsung Galaxy). The seller is promising that he is legally allowed to sell the property, that there are no problems in the title, and that there are no liens or responsibilities you don’t know (or should know) about. If you later find out there are any problems, you can sue the seller (or make a claim against the policy if you have title insurance). A Special Warranty Deed is what you will almost always get when buying a new home from a developer. It is still a promise...but not as strong. When transferring the property via a Special Warranty Deed, the seller is saying, "I promise that there have been no problems with the title since I purchased it. I'm not making any promises about what happened before I owned it." Finally, the Quit Claim Deed is the worst of them all. When transferring a property by Quit Claim, the seller is doing just that -- quitting. He is saying, "I'm out. I am not making any promises about any rights I might or might not have in the property, but whatever I have, it is yours." This is basically, the "as is" type of deal on a new car. "Hey! If it breaks down, don't blame me." If there are any problems found with the title, such as your dispute over who actually owns the land, the receiver of a Quit Claim Deed is unprotected. If the seller had no right to transfer the property, then the buyer never received anything. On top of that, because the seller gave a Quit Claim Deed, he never made any promises that he had anything to give, which means the buyer can't sue him based on the deed (there may be other ways to sue depending on the facts of the case, but not based solely on the Quit Claim Deed).
Here is how taking a Quit Claim Deed could cost you a whole lot more than a Warranty Deed or Special Warranty Deed. Let’s say you took a Quit Claim Deed and found out later that the seller did not really own the property. You did not purchase title insurance (we know this because the title company would have required the seller to give you a Warranty / Special Warranty Deed). The real owner sued you for ejectment, and you lost. At this point you have lost all the money that you spent on the property. You can try to sue the seller, but what if he has no money? What if he has left the country and can’t be found? What if it was a company that is now bankrupt? How are you going to get your money back? Now, let’s look at that same situation, but you received a Warranty Deed, instead. Even though you did not purchase title insurance, let’s say that the seller purchased title insurance. You sue the seller based on his failed promises in the deed (breach of the warranty). The seller has no money to pay you, but he can make a claim on his insurance policy. You are now “bootstrapped” onto his title insurance policy and at least partially protected from losing all your investment.
It is easy to see, then, that as a buyer, you should never accept a Quit Claim Deed without an experienced real estate attorney advising you why it is the right deed for that situation. You can demand a Warranty Deed from almost anyone. Typically, the only ones who will refuse to provide a Warranty Deed are big developers/builders, selling new homes. They are the ones with the negotiating power to do that. If you want to purchase from them, you will have to accept a Special Warranty Deed -- which is still a whole lot better than a Quit Claim Deed.
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