Warranty Deed versus Quitclaim Deed
What’s the difference between a Warranty Deed and a Quitclaim? I’ve also heard clients incorrectly call it a ‘Quickclaim Deed”. The main difference between the two types of deeds is what the seller guaranteeing, and what protection the buyer is receiving.
A Warranty Deed contains a clause in the Deed that effectively warrants, or guarantees, that the Seller owns the land that they are selling. If it turns out that they don’t own the land (because their grandfather or great uncle didn’t own the land forty years ago and the title chain was incorrect, or their share of the inheritance of the property was really one-third and not one-half) then the Buyer is still protected. The Seller is on the hook to defend the title.
For example: If Abraham sells a house to Benjamin for $100,000 by Warranty Deed, Abraham is promising Benjamin that he owns 100% of the house and that he is selling Benjamin 100% of the house. If Benjamin buys the house, gives the $100,000 to Abraham, and then it turns out that Abraham only owned half of the house, and Abraham’s brother owned the other half, Abraham must defend the title and pay for the expenses of making Benjamin whole again.
The Warranty Deed is great for the Buyer, because it gives the Buyer protection. If the property is being purchased with a note/mortgage from a bank, the bank will always require that the property be purchased with a Warranty Deed. This Warranty Deed will protect the Buyer, but also protect the bank’s investment and collateral for the loan.
A Quitclaim Deed does not contain any warranty, guarantee, or promise. It simply transfers whatever interest the Seller has in the property from the Seller to Buyer. If it turns out the Seller does not own 100% of the property, the Buyer is the one left holding the bag.
For example: If Abraham sells the same house to Benjamin for $100,000 using a Quitclaim Deed, and it turns out he only owns 50% of the house, this time it’s Benjamin on the hook. The Quitclaim Deed only transfer the amount of interest the Abraham had, whether it was 100%, 50%, or 5%.
For that reason, a Quitclaim Deed is only used to transfer property to a living trust by the Grantor, or the Buyer is aware of the problems with a particular piece of property and a bank is not financing the purchase. By far, the majority of purchases are made with a Warranty Deed. It’s often hard to get Title Insurance on property transferred by Quitclaim Deed.
Blaise Regan is a Partner at Regan & Frisbie, PLLC, a law firm focusing on Wills, Trusts, Probate, Contracts, Business Formations (LLC, Corporation, S-Corp Designation), Business Disputes, and Consumer Litigation.
Regan & Frisbie, PLLC is located at 7160 Preston Road, Suite 100, Plano, Texas 75024.
Comments or questions, feel free to email him at Blaise@RFPlawfirm.com or call him at 469.200.4737.
*Nothing in this Article is to be considered as the rendering of legal advice for specific cases, or creating an attorney-client relationship, and readers are responsible for obtaining such advice from their own legal counsel. This article is intended for educational and informational purposes only, and no warranty or representation is made as to the accuracy or completeness of the information contained herein.