In the days of yore, a person selling land would hand a clump of dirt to the buyer. This symbolic gesture, called the livery of seisin, was actually more important than any written document. In the 21st century, real estate transactions no longer involve the transfer of pocketfuls of rocks and twigs. Rather, the paperwork has taken over as the significant transfer medium.
The Quitclaim Deed
As defined by Realtor.com, a quitclaim deed is a real estate transaction between two parties where there is no exchange of money. In essence, the person giving the property, who is called the “grantor,” “quits” the property and gives it to someone else, who is called the “grantee.” Usually, these two people know each other.
In many cases, such transfers of ownership are to correct typographical errors in existing paperwork, add or remove people from the title, as in cases of marriage or divorce, or to put property into a trust, along with other familial and friendly transfers. In some instances, people will transfer ownership of a property to someone else to keep it safe in case of a lawsuit or other punitive measure that could cause the seizure of property. Such a transfer may or may not be legal in a particular jurisdiction, so it is always a good idea to seek professional legal advice before embarking on such a plan.
If a mortgage or other lien exists on the property in question, the responsibility for that lien rests with the names on the lien and not the ownership deed. For example, John and Mary own a home. They have a mortgage in both their names on the home. They get divorced, and John grants Mary ownership of the home. Even after such a transfer, John is still responsible for the mortgage if Mary doesn’t pay it. This is another situation where legal advice would be of paramount importance.
If someone wishes to transfer ownership of a property that contains a mortgage, there might be a real problem if a “due on sale” clause exists. Such a clause means that as soon as the property changes hands, the entire mortgage becomes due immediately. Without the sale of the property to provide the funds to pay off the mortgage, the grantor would be in a terrible situation indeed.
It is also crucial to determine if the title being transferred is “good.” Obviously, someone who does not actually own a certain property cannot transfer it. Doing so, either nefariously or by accident, can result in a veritable Gordian Knot of problems for all parties involved. Checking a title is quick and easy, and there is no excuse for not doing so.
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As with any document regarding the legal transfer of property ownership, all parties involved should take steps to protect themselves legally by obtaining legal advice, such as from a real estate attorney. All transactions should be duly notarized, and everyone should keep copies of everything. Due diligence takes little effort, yet it will provide protection and peace of mind for all involved.