When it comes to transferring property, such as our rental properties into LLCs and our personal residence into a Trust, it can be confusing understanding the differences between a Quit Claim Deed, Warranty Deed and other terms that may be thrown out.

Some states use the term “Grant Deed”, California being one of the most preeminent. The reality is that a Grant Deed can be used as a Quitclaim Deed OR a Warranty Deed. It essentially depends on the verbiage used inside the terms of the Deed itself. Bottom line- Make sure that you look at the language used in the deed itself. Don’t think that because you have a Grant Deed you have all of the benefits of a Warranty Deed. Here is a brief description of each type of Deed:

Quitclaim Deed

A quitclaim deed transfers whatever ownership interest a person has in a property. It makes no guarantees about the extent of the person’s interest. Quitclaim deeds are also frequently used when there is a “cloud” on title — that is, when a search reveals that a previous owner or some other individual, like the heir of a previous owner, may have some claim to the property. The transferor can sign a quitclaim deed to transfer any remaining interest.

Warranty Deed

A warranty deed transfers ownership and explicitly promises the buyer that the transferor has good title to the property, meaning it is free of liens or claims of ownership. Also, whatever the ‘title’ of the deed is you may use, check the verbiage in the deed itself to understand what warranties you may be making, if any. The transferor guarantees that he or she will compensate the buyer if that turns out to be wrong. The warranty deed may make other promises as well, to address particular problems with the transaction.

Our Recommendation

Always double check the ‘local’ state and county laws regarding the type of deed to use when transferring property and what the different types of deeds actually provide. HOWEVER, we generally recommend the Warranty Deed when transferring property to yourself, your trust, or your own company; because we want to make sure that the Title Policy and all of its benefits transfer to the Grantee of your deed.

 

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