Quitclaim Deeds: 4 Things to Know Before Signing

Quitclaim deeds are a very common type of legal document that deals with the rights associated with a property. The forms are commonly used for divorce or joint mortgages. While you may be considering signing a quitclaim deed, you need to fully understand what you are signing before you do. Here are a few things that you need to know before signing a quitclaim deed.

1. Immediately Relinquishes Rights

When you sign a quitclaim deed, you are immediately giving up any rights that you have in a property. For example, let's say that you and your spouse own a piece of property together. As it stands now, you and your spouse have an equal right to the property. If the house was sold, you would each be entitled to your share of the proceeds. When you sign a quitclaim deed, you are basically giving complete control of the property over to the other party in the mortgage with you. If the house is sold, you are not entitled to any proceeds and you no longer have any rights to the property.

2. Does Not Warrant the Claim is Valid

With other types of deeds, there are implied warrantees that the claim to the property is valid. However, with a quitclaim deed, there is no such warranty. When you sign a quitclaim deed, it does not necessarily mean that you have any legal rights to the property in the first place. Therefore, your signature comes with no guarantees or warrantees on the property you are signing for. This makes the quitclaim deed a very unique deed instrument.

3. Does Not Release You from Financial Obligations

Just because you sign a quitclaim deed, that does not release you from any financial obligations by itself. If you had a joint mortgage with someone and you simply sign a quitclaim deed and nothing else, you are still obligated to pay that mortgage. If your partner stops paying the mortgage, it will still come back to hurt your credit. Even though you have no rights to occupy the property or sell it, you are still obligated to it financially.

If you want to detach yourself from the financial obligations associated with the property, you will need to sign a quitclaim deed. However, you will need to combine that with the refinancing process to insure that a new loan is taken out without your name on it. You need the party that is getting your half of the property to pay off the existing loan with a new one. Then you will be free from any financial obligations to the property.

4. No Home Warranty

When someone transfers a property to you through a quitclaim deed, you are basically taking the property "as is". There is no implied or legal warranty with the house. Therefore, you need to thoroughly inspect the house before you take a house through a quitclaim deed.

What does compensation for signing a quitclaim deed mean?

A quitclaim deed is a type of deed that relinquishes ownership of a piece of property to another individual on the title. Many times, an individual that gives up rights to the property will receive some type of compensation for doing so. This is very common with divorce situations in which one spouse is going to continue living in the house and the other one is moving out. The spouse that is staying in the property will provide some type of compensation to the spouse that is moving out if he or she will sign the quitclaim deed. 

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