Are you a real estate investor interested in quitting deeds? Then you should know five important facts about real estate transfers!
If you are a real estate investor, you are always looking for attractive properties with an even more attractive price. Let’s say a family member has offered you a quitclaim deed for their property.
What should you do in this case? Should I take it or not? What should you consider before making a decision?
Before you accept or reject it, you need to know what quitclaims are and five important facts about quitclaims for real estate transfers.
What are waivers?
A quit claim is a legal document that is often used for the non-monetary transfer of real estate between family members or a trust.
The deed deals with the release of the seller’s interest in the property without any security for it. However, it prevents the settlor from again showing an interest in the property.
Quitclaims do more than transfers ownership. There are a few other things to know about them.
What does the waiver include?
- The legal description of the property;
- Name of the person transferring his property (the settlor);
- Name of the person or trust receiving the property (the transferee);
- The date of the transfer;
- Notarized signatures of both parties involved.
If you’re a real estate investor in California, Florida, Georgia, or Texas looking for a quitclaim form in Georgia, for example, you need to know these five facts about quitclaims for property transfers real estate.
5 important facts about waivers
Before offering someone a quit claim or accepting someone else’s deed offer, you should consider these five facts discussed below.
1. It offers the least protection
Quitting deeds do not assure the beneficiary that there are no liens or encumbrances once the transfer of ownership is complete. Nor does it prove that the settlor owned the property before transferring it.
The settlor speaks only of the property, declares the release of the property and, as the name already suggests, waives any claim to the property. It does not protect you from any inherent risk regarding ownership.
2. Only accept it from a donor you trust
Because waiver deeds provide no guarantees that they are free of liens and offer the least protection, it is best to accept the deed from someone you trust. A good practice is to accept it from a trusted family member.
Couples who have recently married can use quitting deeds to add a spouse to their property. Conversely, couples heading for divorce can use deeds to remove a spouse’s name.
If a trust wishes to accept a quit claim, it should do so with caution and only if it knows and trusts the settlor.
3. This does not affect the mortgage
Quitting will only transfer ownership from the transferor to the transferee. This will in no way affect the mortgage on the property. In this case, the settlor will remain responsible for reimbursing the mortgage even after the transfer of ownership.
Usually, quitclaims do not take place if there is an outstanding mortgage. Even if the transfer is done with the mortgage, the beneficiary requires guarantees from the mortgage until it is fully repaid and also requests a deed of guarantee.
4. You can clear a title defect with a quitclaim
If you have a flaw in the title, say a misspelling, then you can use a disclaimer to correct it. This will only change the title and will not affect ownership or anything related to it.
You can also use it to correct information about improperly transferred property. If there is a problem with the signature, you can use this deed to correct it. You can also use it to correct the wordings of your property papers.
5. The title must be good enough
A disclaimer can only provide the protection of a warranty deed if the title is good and free from error. If the title has any defect, the purchaser will not be able to take legal action against the settlor.
Sometimes when investigating the title insurance deed, the title company may find what is called a “cloud” in the title. This means that there may be someone who has an interest in the transferred property, but their name has not been reflected in the title.
To avoid such situations, the title of the waiver should be clear.
Transferring properties can be complicated, especially if you don’t know exactly what you need to do, which deed to use, and if you don’t have a clear idea of the deeds you are dealing with.
A waiver is something essential that you need to know as a real estate investor so that you can fully understand what you will be dealing with.
Hopefully this short but informative article on five important facts about quitclaims for real estate transfers has given you a basic idea.
1. Can I benefit from the property I obtained with Quitclaims?
Yes you can. If you want to use this property as a rental property and realize capital gains, you will need to get a 1031 exchange. This can be very complicated if you are trying to do it yourself. So research the rules and tips and work with an expert on them.
2. Can I transfer my property to a corporation using a quitclaim deed?
Yes, you can transfer it to a corporation or LLC using a Quitclaim Deed. You should keep in mind that if you have any outstanding loans, the expiry clause of the sale can be activated if you have any outstanding mortgages. This means that you can condition the company to pay off the remaining mortgage.