In New Jersey real estate transactions, there are three types of deeds used to transfer ownership interest in a property from the seller to the buyer: general, quitclaim and special warranty deeds. A quitclaim deed is the easiest to create and can work well in particular situations. But it isn't always the best choice.
Before choosing to use a New Jersey quitclaim deed, it pays to get an overview of the range of deeds and their best uses.
Deeds in the State of New Jersey
"Deed" has two meanings in real estate law. It refers to a legal document that describes the owner of a particular piece of real property, and it also refers to the legal document that is used to transfer an ownership interest to another. Usually a deed does both.
In New Jersey, a deed used to transfer an ownership interest will be one of several types, including a bargain and sale deed and a quitclaim deed. While these deeds are effective in transferring title, a buyer should be particularly careful since the differences in protection for the buyer are significant. Protections come in the form of covenants.
What Is a Covenant?
A covenant is a promise or guarantee from the grantor of the property and is written into the deed. The types and amount of covenants a deed contains will define the deed. Present covenants are promises that apply at the time of the transfer; future covenants refer to the seller's promise to take care of issues that may arise in the future.
Some deeds in New Jersey, like the popular bargain and sale deed, offer many protections to the buyer in terms of the covenants they contain. Others, like a quitclaim deed, offer few covenants and little protection.
Types of Covenants in Deeds
The basic covenants offered with a deed in New Jersey are:
- Guarantee from the seller that the real property being sold is clear of any hidden mortgages and liens.
- Guarantee from the seller that they have the right to make the current sale.
But there are, in fact, many additional covenants in some New Jersey real estate deeds. Some of the most important include:
- Covenant Against Grantor’s Acts: A promise that the seller has not taken any action that will encumber the title.
- Covenant of Seizin: Promise that the seller, at the time of the sale, owns an “absolute and indefeasible estate” at the time of transfer to the grantee.
- Covenant of Right to Convey: Guarantee that the grantor has “good right, full power and absolute authority” to transfer title in the way intended by the deed.
- Covenant of Freedom of Encumbrances and Quiet Enjoyment: Promise that the property being conveyed is free and clear of all former mortgages, judgments, executions, and all other encumbrances. Quiet enjoyment covenant is a promise that the buyer and their heirs will be able to possess the property without having to deal with any lawful claim against the seller's title.
- Covenant of General Warranty: Future guarantee that the seller will “forever warrant and defend the property transferred against all claims” to the buyer's and buyer's heirs, representatives, and assigns.
- Covenant of Further Assurances Future guarantee that the seller will do everything necessary after the sale to assure that the real property is conveyed as intended in the deed.
New Jersey Bargain and Sale Deed
Most individuals purchasing real property in New Jersey from strangers want to take title via a deed with maximum protections. That is why most property is transferred with a bargain and sale deed. It conveys the entirety of the interest owned by the seller at the time of transfer.
The bargain and sale deed also makes significant guarantees about the state of the title. This deed contains all of the covenants described above.
Quitclaim Deed in New Jersey
A New Jersey quitclaim deed provides almost no protections to a buyer. Though it is a legal document that conveys an interest in real property, that interest is not well defined or certain. The deed transfers whatever interest the grantor may have in the real property, but makes no promises or guarantees about:
- Whether the seller has an interest in the property.
- What that interest is.
- Encumbrances or liens on the property.
- Whether anyone else claims an interest in the title.
If the seller turns out to have no interest at all in the real property, the buyer receives nothing of value, and the seller specifically states that they do not make any guarantees about defending the buyer against anyone else claiming title.
"As Is" Property Transfer
Moreover, a New Jersey quitclaim deed transfers the property "as is." That means that the buyer must take on any encumbrances whether they know about them at the time of purchase or not, including:
- Property tax liens.
- Judgment liens.
- Other liens that are attached to the property.
Uses for Quitclaim Deeds in New Jersey
Because of the lack of covenants, buyers usually reject quitclaim deeds for traditional purchase and sales. However, these deeds do have their purposes. Quitclaim deeds are most often used for real estate transfers among family members, in divorces, or between related businesses and entities. They are also used in New Jersey to correct errors in deeds or to resolve title issues.
The key word that identifies a quitclaim deed in New Jersey is "release." The seller releases and quitclaims to the seller all the right, title, interest and claim that the seller owns in the property. There is no language guaranteeing or covenanting any particular interest or any future protections of that interest.
Preparing a Quitclaim Deed
To prepare a lawful quitclaim deed in New Jersey, most people use a quitclaim deed form that works in the county in which the property is located. For example, if the property is in Atlantic County, use the quitclaim deed packet for that county.
A quitclaim deed must include:
- Seller's full name.
- Seller's mailing address.
- Seller's marital status.
- Buyer's full name.
- Buyer's mailing address.
- Buyer's marital status.
- How buyer will hold title, whether by sole ownership or in co-ownership.
- Complete legal description of the property.
A New Jersey quitclaim deed must be signed by the seller in front of a notary public. In order for it to be valid, it should be recorded at the recording office in the county where the property is located. A recording fee is normally charged for this.
- Investopedia: Quitclaim Deed
- Justia: 2021 New Jersey Revised Statutes Title 46 - Property Section 46:4-6
- Justia: 2021 New Jersey Revised Statutes Title 46 - Property Section 46:4-3
- Justia: 2021 New Jersey Revised Statutes Title 46 - Property Section 46:4-5
- Justia: 2021 New Jersey Revised Statutes Title 46 - Property Section 46:4-4
- Justia: 2021 New Jersey Revised Statutes Title 46 - Property Section 46:4-7
- Justia: 2021 New Jersey Revised Statutes Title 46 - Property Section 46:4-10
- Earl White Law: Types of Deeds in New Jersey
- Deeds.com: New Jersey Quit Claim Deed
Teo Spengler earned a J.D. from U.C. Berkeley's Boalt Hall. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an M.A. and an M.F.A in creative writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.