Quitclaim Deeds: When You Should Use Them
In a previous post, we discussed the Top 3 Reasons Why You Shouldn’t Use A Quitclaim Deed. Of course, there are times when it is appropriate to use a quitclaim deed!
The best use of a quitclaim deed is to remove a cloud from the chain of title. What’s that mean? Any time there is a real or apparent dispute regarding ownership interest, liens, encumbrances or any sort of claim against a property we call it a “cloud on the title“.
(In the event you are unable to remove a cloud on title with a quitclaim deed, you may have to file a Quiet Title Action.)
Removing a person from title
For most title transfers, using a quitclaim deed isn’t the best idea (for reasons already discussed). But sometimes, a quitclaim deed does exactly what you need it to do! How do you decide when it’s appropriate to use a quitclaim deed? One helpful way to ask yourself whether or not the party you’re removing from title was supposed to be on there in the first place.
Let’s assume, for a moment, the following:
- You are married. (Congratulations!)
- Your parents own property in a community property state.
- Your parents want to transfer that property to you as your “sole and separate property”. (You have been married for years now… when are they just going to accept your spouse as a member of the family already?!)
- You are named in as a grantee in the deed, and it even says “as sole and separate property”. (Or alternatively your marital status is not disclosed at all.)
- Your spouse never signs a disclaimer deed.
In this situation, your spouse actually owns half of your interest! Because you were supposed to be the only one on title, it would be considered a “cloud” and a quitclaim deed would be the perfect instrument to clean things up.
If title was intentionally conveyed to you and your spouse together and one of you wants to be removed, you might want to consider signing another document such as a Special Warranty Deed. It might just save you some trouble down the line.
Sometimes, the boundary at which your property stops and the adjoining property begins is not so clear! A common boundary dispute arises when a survey reveals that a fence (or other structure) has been built on what turns out to be the neighboring property. This is called encroachment.
An easy way to fix the situation would be for your neighbor to simply quitclaim “the west 5 feet” (or whatever part of their land your fence is on) to you, thereby resolving the encroachment. Of course, you can’t force your neighbor to simply give up their land… but asking won’t hurt! (You might remind your neighbor they benefit from the fence as well. Also, a bottle of wine and a compliment sure couldn’t hurt!)
If your neighbor is unwilling to quitclaim the portion of land in question to you, you could also sign and record an encroachment agreement. This will disclose publicly how the parties resolved the encroachment issue and offers some additional protection.
If nothing else seems to work, you might have to bite the bullet and take down the structure. There’s only so long you can fence with someone over a fence!
Because quitclaim deeds don’t make any guarantees of ownership, they can also be signed used to prevent cases of adverse possession.
What if you have been using your neighbor’s driveway for years? You know the driveway isn’t yours, they know it isn’t yours, but now your neighbor is selling their house… A potential new buyer comes over and sees that you have been using the driveway as your own! The new buyer becomes concerned about you claiming the driveway for yourself through adverse possession law.
In this situation you can execute a quitclaim deed to show for the record you don’t have any rights to the driveway. That prevents any adverse possession claim and satisfies the new buyer. (You may not enjoy the use of the driveway anymore, but hey… your neighbor was nice enough to give you the west 5 feet of his property over that fence dispute, remember? It’s the least you can do!)
Are you a grantor (seller) with something to hide?
We have to at least address the possibility that you could have some unscrupulous motivation for using a quitclaim deed. After all, this is what a title company is afraid of when they see a quitclaim deed where another instrument should be!
You want to sell a piece of property. You have a buyer and have convinced them everything is on the up and up… except there’s a problem: You are about to get a judgment against you. Or, there’s an unrecorded lien against the property you know about. Heck, maybe you actually already sold an undivided 50% interest to someone else… in all of these cases, you’re a scumbag that is trying to hide the truth from the buyer and you think you should use a quitclaim deed so they can’t sue you later.
Will it cause you more problems down the road? Definitely.
Do we recommend this as a course of action? Never.
Shame on you!