Quit Claim Deed vs. Warranty Deed

Knowing the difference can save you $1000s

When you are buying an investment property in the 'hood', it is important to know the way that title will be transferred to you.

The ownership rights of the property will be transferred to your name and recorded in public records using a document known as a 'Deed'.

This document will indicate the name of the person or entity that is selling you the property, along with a legal description and the sales price of the property and will be recorded with the local Register of Deeds.

While there are several different ways to receive title to an investment property, the two ways we are concerned with are via Quit Claim Deed (QCD) and Warranty Deed.

It is important for you to know how you will be taking title to the investment property and the difference between receiving a Quit Claim Deed or a Warranty Deed.

The most secure form of property ownership is by Warranty Deed.

With a Warranty Deed, the seller (also known as the 'grantor') warrants or guarantees that they are the lawful owner of the property at the time the deed is made and delivered and that they have the right to convey the property.

The seller warrants that the property is free from all encumbrances or liens i.e., delinquent property taxes, delinquent water bill and/or mortgage.

The seller also warrants that they will defend title to the estate so that the buyer (also known as the 'grantee') and the buyer's heirs and assigns may enjoy quiet and peaceable possession of the premises with the power to convey the property.

The bottom line is that with a Warranty Deed, you are receiving ownership of the property 'free and clear'.

The seller is essentially guaranteeing that there are no additional liens or potential claims against the property. This is the most preferable and desirable form of title.

Transfer of a property via Quit Claim Deed is the least secure form of property ownership and therefore the least desirable.

In essence, the seller is 'quitting their claim or interest' in the property (if any) to the buyer.

A Quit Claim Deed conveys to the buyer (also known as the 'grantee') and the buyer's heirs and assigns in fee all of the legal or equitable rights the seller has in the property that existed at the time of the conveyance.

There are no warranties or guarantees of title.

This means that there may be delinquent property taxes due, delinquent water bill due and there may be other liens or potential claims to the title by other persons and/or entities.

There is no guarantee being given that the seller of the property has clear title or ownership.

Anyone can essentially provide a Quit Claim Deed to a property, even if they have no real interest or claim to the property.

It is very important that you perform your due diligence for properties that are being offered for sale via Quit Claim Deed only.

Make sure that the person or entity that is offering to sell you the property via Quit Claim Deed has actual ownership and title to the property and has the legal right to sell you the property.


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