Quitclaim Deed Basics
A Florida quitclaim deed is a legal document that allows real property to be transferred without any guarantees of title. In Florida, it’s a straightforward and affordable way to transfer whatever title the property owner has to the recipient, also known as the grantee.
This type of deed is commonly used in Florida to add or remove family members from the property title, transfer property to the owner’s LLC or living trust, or remove an ex-spouse from ownership after a divorce. However, it’s important to note that the quality of title the grantee receives depends on the title in the hands of the grantor.
If the grantor has good and marketable legal title to a property, free and clear of all liens and encumbrances, then the Florida quitclaim deed will transfer good and marketable title to the grantee. But if there are defects in the chain of title or liens on the property, the same problems are conveyed to the grantee.
One important thing to remember is that you can’t transfer more than you have with a quitclaim deed. In other words, if you try to transfer full legal title to a piece of property when you don’t actually have clear and marketable legal title, the deed won’t convey good title to the grantee.
Rules And Requirements of Florida Quitclaim Deeds
So what are the rules and requirements for a Florida quitclaim deed? The current owner of the property, or grantor, must include the grantee, the amount of money received in exchange for the property (consideration), a formal written legal description used to identify the property (not just the USPS address), the grantor’s signature (but not the grantee’s), the signatures of two witnesses, and the signature of a notary.
Quitclaim Deeds vs. Warranty Deeds
When you purchase a property, it’s crucial to ensure that you’re getting a clear and marketable title, without any liens or title defects. This is where a warranty deed can be helpful. It’s the type of deed that’s often used when selling real estate to people who aren’t related. With a warranty deed, the seller guarantees that the title is clear and marketable, and they’re responsible for any title defects or liens that arise after the sale.
Title insurance companies, like our sister title company, Clear2Close Title & Escrow, LLC, can even sell insurance for warranty deeds, but only after they’ve examined the recorded chain of title.
On the other hand, a quitclaim deed doesn’t provide any guarantees about the title. It’s usually used in Florida for transfers between family members, transferring property into a trust or family-owned businesses, and these transfers are typically done for no payment, meaning that no money is exchanged.
If you’re considering transferring property between people who aren’t related, it’s generally best to avoid using a quitclaim deed since it doesn’t offer any protection for the buyer against title issues.
Quitclaim Deed Risks
Before transferring property in Florida, make sure you consider the following:
First off, make sure you know which of the current homeowners qualify for Florida’s Homestead Tax Exemption, as transferring property via quitclaim deed without this knowledge may result in losing the exemption entirely or significantly reducing it.
Also, keep in mind that transferring property via quit claim deed may lead to a reassessment of property taxes, resulting in an increased amount owed each year based on the property’s new value.
Another important factor to consider is the possible cancellation of an Owner’s Title Insurance Policy when transferring property to another owner or adding subsequent owners.
When transferring property, you’ll likely owe Florida Transfer Taxes calculated on the amount of any outstanding mortgage or the fair market value of the property at the time of transfer. Taxes may even be due on a quitclaim deed transfer between spouses.
Liability is another key consideration as adding an individual to a deed means that transferee now owns a portion of the property, and if that ownership is not protected by existing law, the transferor’s interests may be affected by the creditors of the transferee. If the transferee files for bankruptcy or is obligated on debts that allow a creditor to attach to the subject property, the transferor may lose the property entirely.
Additionally, keep in mind that some homeowner or condominium associations may have restrictions or require approval prior to transferring property.
Lastly, certain governmental benefits like Medicaid eligibility or social security payments may be significantly reduced or eliminated altogether as a result of a quit claim deed transfer. Improperly transferring property may also make probate inevitable upon the death of a current owner, and certain transfers via quit claim deed may require the transferor to report it to the IRS as a “gift”, which can result in unintended tax consequences.
If you have real property in Florida, and need help with a quitclaim deed, call Law Office of Ryan S. Shipp, PLLC today @ 561.699.0399 to learn more about our quick and cost effective process.