A quit claim deed conveys real estate without any warranties regarding clear title.
- Selling or giving away property that you cannot guarantee you have good title to, despite a good faith belief that you are the legal owner
- Purchasing property for which a seller cannot guarantee good title
A quitclaim deed is used to convey a piece of property when the existing owner cannot make any guarantees to the new owner that the title is valid. Rather, the prior owner merely “quits” her “claim” to the title without making any representations regarding whether her title was good in the first place.
Bona fide purchasers who pay for property in good faith typically expect to receive good title, and for the most part that is the case. However, public records of property transactions can span hundreds of years, and sometimes the chain of title for a piece of property is broken as a result of an error that occurred far in the past. The property title continues to be transferred from owner to owner without anyone knowing that each of these transfers is invalid because of past error.
Because the risk of an encumbered or bad title is a concern in some real estate transactions, sellers may choose to convey property through a quit claim deed. The quit claim deed does not require a seller of real property to swear that the chain of title was never broken, and instead the burden is on the buyer to perform due diligence in this regard.
If a holder of a quit claim deed discovers that the chain of title had been broken, and in fact he does not legally own the property he believed he had purchased, he typically has no legal right to a refund of the purchase price of the property. If you are involved in a real estate transaction where the seller is offering a quit claim deed, it is best to consult with a title insurance company and an attorney before completing the sale.