A quit claim deed form, which is simply called a "quitclaim" by legal professionals, is a very simple state-prescribed legal document that transfers interest in real property from one person to another.

Quitclaim deeds are a more efficient and inexpensive way to transfer interest in property. However, before you use a quitclaim form, it's important to know the basics of how this can affect the property's title.

What Does a Quitclaim Do?

A quitclaim transfers interest in real property from granter, the person who purportedly owns the property, to the grantee, the person receiving the property. A quitclaim essentially makes the statement, "If I, granter, have any interest in this property, I relinquish it to you, the grantee."

What a quitclaim deed does not do is guarantee that the title to the property has no encumbrances. There could be tax liens against the property, for example.

Or perhaps the person who signs the quitclaim form has very little or even no interest in the real property and never had the authority to "quit" his interest. In some states, quitclaims are viewed very sceptically, particularly by title insurance companies. However, quitclaims can have a practical application when there is a trusted relationship between the granter and grantee and the quitclaim is used for legitimate purposes.

The Quitclaim Form

Quitclaim deed forms vary in wording from one state to the next, but they are straightforward, one-page documents.

The names of the granter and grantee are contained in the form, as well as a legal description of the property, and the manner in which the property will vest, usually a sole ownership. The amount of consideration will be included. If the quitclaim is used during the course of estate planning or after a divorce, this may be as little as 60p. There is a signature line for the granter and notary.

Some states also require the grantee to sign the quitclaim as well. After the quitclaim is signed, it is filed in the property records in the county in which the real property is located.

Common Uses for Quitclaims

Quitlclaims are frequently used after a divorce, when one spouse is awarded the marital home; the other spouse "quits" his rights to the property, allowing rights to transfer seamlessly.

Another use for a quitclaim is when a person who owns real property gets married and wishes to add a new spouse to the property title--she can quit her interest and grant it to both herself and her husband.

Someone preparing a life estate may use a quitclaim to transfer interest in property to heirs and grant them a life estate. This permits them to enjoy the property while they are still living.

Quitclaims & Real Property Sale

Quitclaims are not an optimal way to sell real property and in fact might deter potential buyers. Buyers typically want a deed with warranties, in which the granter makes assurances that the title is clear of encumbrances--and if any arise, the granter will "warrant and defend" the title.

Warranty deeds are also more attractive to lending institutions and title insurance companies. In some states, a title that passes under a quitclaim deed is uninsurable.

Unethical & Illegal Use of Quitclaims

Some property owners mistakenly turn to quitclaims when they face losing the property through pending foreclosure or bankruptcy. However, assigning property rights to a trusted relative or a friend won't stop a foreclosure. Mortgage documents have a "due on sale" clause that requires new owners to pay the full cost of the property to the lender upon transfer. Similarly, quitclaiming your property rights to a spouse or relative to avoid property being subject to bankruptcy is a fraudulent use of the instrument; if the quitclaim was signed a year before the bankruptcy, a court will typically reverse it.