Similar to other types of deeds, quitclaim deeds are used to transfer ownership of property in Florida. The main difference is that a quitclaim deed transfers whatever title the person signing the deed has in the property to another party.
In this article, you will have an overview of the disadvantages of Florida quitclaim deeds.
Florida Quit Claim Deeds – Understanding the Concept
A Florida quitclaim deed needs two parties involved to be properly executed – the grantor and the grantee. The grantor is the individual or entity that conveys the title to the new owner, which is referred to as the grantee.
A quitclaim deed serves to transfer whatever interest the grantor has in the property to the grantee. Even though it is possible to use it for property sales, it is rare to find property transactions executed with a quitclaim deed in Florida.
The standard type of deed used in real property sales is the warranty deed. With a warranty deed, the grantor assures the grantee that he or she actually owns the property and its title is clear of defects.
In such cases, the grantee is liable for title defects discovered after the property was already transferred. In terms of reliability, the best approach is never to use quitclaim deeds with unrelated or unknown people.
The use cases for quitclaim deeds usually do not involve the exchange of money. For example, Florida residents tend to use quitclaim deeds to transfer real property to a loved one, title property in the name of a trust or LLC, and other similar circumstances.
If the grantor attempts to transfer the legal title to a property with no clear title, the deed will not convey a good title to the grantee.
What Are the Disadvantages of a Quit Claim Deed in Florida? – An Overview
Even though quitclaim deeds are a great resource in specific situations due to their simplicity and pragmatism, they may result in several flaws when not used properly.
Questionable Quality of Title
In Florida, a grantor using a quitclaim deed cannot transfer more interest than he or she actually has in a property.
If a person uses a quitclaim deed to transfer the title of property clear of liens and encumbrances, the grantee will not have problems. Conversely, using a quitclaim deed to transfer the title of property with liens and defects may adversely affect the grantee.
No Warranty to the New Owner
A quitclaim deed does not assure the grantee that the property has no title defects, which explains why this type of deed is rarely used in real estate transactions. Additionally, a grantee waives the right to sue the grantor in case of discovering title defects after closing.
Hardship for Mortgage or Insurance Approval
Title insurance companies and mortgage lenders tend to deny approval for their services if the applicant’s property is not titled with a warranty deed. Both underwriters and lenders need the guarantee of legitimate property ownership, which is something a quitclaim deed cannot provide.