Quit claim deeds and warranty deeds are not the same.
If you own real estate, you have a deed.
A deed is essential to the buying, selling, and transferring of a property.
According to a recent Bankrate article titled “Quitclaim vs. warranty deed: What you need to know,” the type of deed you have for the property is important.
The two basic types of deeds are quitclaim deeds and warranty deeds.
A quitclaim deed does not guarantee the title status of the property.
The buyer or recipient only receives what the property owner actually owns.
A quitclaim is sufficient in cases where there are no liens or other issues with the property ownership.
When would this be a good option?
If you own the property fully, you can use a quitclaim deed to transfer ownership to a trust or a limited liability company you control yourself.
A warranty deed is best when other parties are involved, unless it involves adding the name of a spouse or transferring your interest in a divorce.
If your situation involves greater complexity, you should have a warranty deed in place.
With a warranty deed the sellers or owners of the property are guaranteeing that they hold ownership to the property and have the legal authority to transfer their ownership interests.
This protects the buyer who can sue if the seller misrepresented their ownership.
How is this important for estate planning?
Let us say your children inherited your family home together under a warranty deed.
One child wants to sell and the others do not.
The one child finds a buyer and sells the property.
The siblings who wanted to keep the property and the buyer could sue the renegade sibling since the ownership was misrepresented.
When buying a home from an inherited estate, a warranty deed is the safest choice.
Even if the buying and selling takes place between family members, the warranty deed will protect the legal rights of the buyer.
In short, a warranty deed is the safer option.
If you have real estate as part of your estate plan, work with an experienced estate planning attorney to ensure your plan sufficiently addresses your property ownership according to your specific situation.
Reference: Bankrate (September 4, 2019) “Quitclaim vs. warranty deed: What you need to know”