In our last column, we talked about a special type of deed known as a beneficiary deed. If properly executed and recorded, that type of deed provides the unique benefit of avoiding probate for the property described in the deed. There are several other types of deeds that are used for other specific purposes, and since many of those deeds can affect your estate plan, we are continuing the conversation about two other kinds of deeds: a Quit Claim Deed and a Bargain and Sale Deed.
A Quit Claim Deed is one of the simplest legal documents used to transfer ownership interest in real property from one party to another. Its name describes its function because the person that signs the deed (called the grantor) will "quit" making any "claim" of ownership, possession and/or control over the property described in the deed once the deed is signed. From a legal standpoint, the distinguishing feature of this type of deed is that there is no warranty of title to the person receiving the property (called the grantee). You can think of it as an "as-is" deed because the grantor is giving up everything he or she has in the property, but nothing more; he or she is not guaranteeing anything about the state of title to the property.
There are many situations where a Quit Claim Deed is appropriate in a real estate transfer. For example, if a parent is moving to a retirement community, he or she may quitclaim his or her house to a child. As a result, the child has the right to the property, but the parent is not required to provide any type of assurance on the state of quality of title; it is a gift and the child takes the property as the title then exists.
A Bargain and Sale Deed is similar because it too conveys real property without covenants, but passes whatever interest the grantor held in the property. The grantor is essentially giving the grantee whatever title the grantor has and, more importantly, may acquire later in relation to title on the property. When a bargain and sale deed is preferable over a quit claim deed is a discussion for another time, but since both deeds are used often in this area, we want you to be familiar with those two types of deeds.
Speaking of guarantees and/or warranties, one common misconception we encounter when speaking with clients about real estate is that a deed deals with the environmental or physical condition of the property as part of any warranties it may have. That is not true. No real estate deed addresses any environmental concern or physical condition of the subject property; its scope is limited to the quality of the title and the physical boundaries of the ground that it describes.
As with all of the other topics we discuss in these columns, we discuss the details of Quit Claim and Bargain and Sale Deeds in our no-cost seminars. The next seminar will be Wednesday, Jan. 8, 2020; seating is always limited (no more than eight people), so that we can focus on the specific questions of a small group. If you are interested in attending the seminar, or if you have any questions about this article or topics you would like us to address in future columns, send an e-mail to Kkeim@GJlawyer.com or call (970) 270-1213. Ext.4
Brad Wright's business and estate planning practice includes transactional and litigation matters with a special focus on business succession. His brother, Steve Wright, has a similar law practice in Idaho Falls, Idaho and, together, they assist businesses of all sizes and types with a wide variety of legal issues.
© 2019 Brad R Wright, Steven J Wright