A quit claim is a type of deed that surrenders one person's rights in a piece of property. As with other types of deeds, it can be used to transfer property, particularly real property. Like other deeds, a quit claim includes specific warranties, or promises. But unlike other deeds, a quit claim cannot be used to guarantee a free and clear title. Instead, it can only represent that the person making the quit claim, the grantor, either has no claim to the property or will not act to enforce any claim.
There are two major types of deeds. In a general warranty deed, the grantor promises he is the sole holder of title, has the right to sell the property and has not done so in favor of anyone else, and that there are no outstanding claims against the property by creditors of which he is aware. The grantor can be held liable if these promises are later proved to be untrue. A quit claim deed is much more limited in scope. It makes no assumptions about the extent of the grantor's title or the presence of other claims. The grantor of a quit claim deed cannot be held liable if other claims arise.
Because of its limitations, a quit claim is typically a more brief document than the warranty deed. To be valid, the quit claim must identify the grantor, the property in questions, and must at least refer to consideration received in exchange for the transfer. It must also contain specific legal language that describes the surrender of any claim to the property the grantor might possess by transfer of these rights to the grantee. The grantor must always sign the quit claim in the presence of witnesses, and some states require the grantee to sign as well.
A buyer cannot use a quit claim to defeat claims to property by anyone other than the grantor. What a quit claim can do, however, is to clarify the title of a particular piece of property, which in turn paves the way for a reliable sale. A situation referred to as "cloud of title" can arise if property is owned by a corporation, partnership, trust or married individual. In these cases, one or more person could potentially have interest in the property that could create a claim. A buyer might not be willing to purchase a property unless such potential claims are obviated through the execution of a quit claim by any potential claimant.
Each state has its own specific rules and requirements for the transfer of property. In some states, the execution of a quit claim by the seller is required in every sale. In others, it is completely voluntary. A quit claim is also an effective way to transfer property to a trust, though whether the IRS taxes any capital gains from a subsequent sale of the property has more to do with the terms of the trust itself rather than the instrument used to transfer the property to the trust.
To protect a buyer, a quit claim should be notarized and recorded at the county recorder's office. A title company or title insurer can do the recording for a seller. An unrecorded quit claim can be produced by the grantee and enforced. However, when they sell the property again, the newest buyer will be unable to use the quit claim to protect against the original grantor unless they have a copy of the quit claim or it is made public record.