At Lucent Law, we are frequently contacted by people who ask us to prepare a deed for them. Sometimes they are giving property to their adult child, other times they are selling property. Frequently, the person requesting the deed asks for a quit claim deed, but isn’t aware that there are other types of deeds. A quit claim deed is not the right choice in many situations.
3 Types of Deeds
In Washington, there are three basic types of deeds, differentiated by the extent to which they provide a warranty of title from the grantor (the seller or gift-giver) to the grantee (the buyer or gift recipient):
- Statutory Warranty Deed – includes a warranty of title against any defect other than those listed in the deed itself.
- Bargain and Sale Deed – includes a warranty of title against only defects that the grantor may have created, but not those created by grantor’s predecessors.
- Quit Claim Deed – does not include any warranty of title.
Warranty of Title
The differences between the various deed types come down to differences in the warranty of title. Therefore, the right choice of deed comes down to which type of warranty of title is appropriate for the situation.
A warranty of title is much like any other warranty. In the case of a statutory warranty deed, the warranty is that: a) the Grantor has the right to transfer title; and, b) the title will be free of any defects except those disclosed in the deed. Title defects are anything that detracts from the owner’s unfettered ownership–any kind of claim by another person to use or ownership of the property in some way. Examples include easements, liens, options, or long term leases.
When to Use a Quit Claim Deed
Because they don’t include any warranty of title, the grantor of a quit claim deed doesn’t even have to have an ownership interest in the property. Because of the lack of warranty of title, quit claim deeds are most appropriate for use in situations where the grantee is not paying the grantor for the property, and therefore doesn’t necessarily have a reasonable expectation of a warranty. Common situations where a quit claim deed is likely the right choice include:
- transfers to self-settled trusts
- contributions to an LLC or corporation in exchange for an ownership interest
- clearing title (i.e., there is some question about whether the grantor has an interest in the property)
Quit claim deeds are not generally appropriate where the grantee is buying the property from the grantor, since one aspect of the consideration typically expected by the buyer is the warranty of title. In a typical property sale between two unrelated parties, a statutory warranty deed will usually be the right deed to use. However, in some circumstances, such as where the seller bought the property at an auction, or recently inherited the property, it might be appropriate for the seller to try to negotiate the use of a bargain and sale deed.