Property deeds are legal tools that define ownership for a property. Some deeds also guarantee that the property in specific manners. Of all the various types of property deeds, a quitclaim deed would be the easiest, fastest and cheapest one to use, only because they don’t usually require the help of a lawyer so as to be filled out and filed.

Definition

A quitclaim is one of various kinds of property deeds used to transfer the ownership of a piece of real estate from one proprietor to another. Quitclaims make no promise to the house’s new owner, other than that the previous owner relinquishes (or even”quits”) any claim to the land he may or may not have had before the quitclaim deed. Additionally, this includes rights that include ownership, for example membership in a property owner’s association or use of communal facilities possessed by the property owner’s association.

Uses

Quitclaims are frequently used in divorce settlements, in which the property in question is jointly owned and one partner is giving up his portion of ownership to the other partner. It is also used regularly between business partners that own commercial property, and a single owner buys out the ownership share of the other. Quitclaim deeds, however, can be used in almost any situation where all that’s being transferred is ownership, as, for instance, a parent lending a property to a offspring. Quitclaims are generally not used in conventional property sales only because they don’t ensure that the property is unencumbered (as do warranty deeds).

Monetary Payments

Some deeds (e.g., warranty deeds) anticipate that there’ll be a monetary payment to accompany the transfer of ownership of their property. Other deeds (e.g., present deeds) could only be used if there is no monetary payment involved. Quitclaims can be utilised in either case. However, if there is a monetary payment included in the transaction, it must be recorded on the deed.

Tax Implications

Quitclaims may have taxation consequences. When there was a monetary payment, then the transfer is considered a sort of sale plus a tax must be paid upon the payment at the time the deed is registered with the county recorder’s office. But even if there was no monetary payment, even if the equity in the property is higher than $12,000 (the existing IRS cap on a tax-free present ), then the difference (the equity minus $12,000) must be reported as a present on the new owner’s federal income tax return.

Limitations

Giving someone a property through a quitclaim deed doesn’t relieve the prior proprietor of any liens or encumbrances upon the land prior to the quitclaim. This includes liability for any mortgage notice on the property that has not yet been reimbursed in full. There’s also a statute of limitations on hard quitclaim deeds. Most states give parties two years to battle the deed’s validity. California provides the parties five years. Following the statute of limitations endings, however, the deed may no longer be challenged.

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