Quitclaim Deeds and Senior Homeowners: Convenience with Caution

When someone wants to know which kind of document makes it easy to pass real estate ownership, the quitclaim deed comes to mind. Convenient? You bet.

And quite often, this convenient document is the senior’s deed of choice. This is because so many seniors decide, at some point in their lives, to transfer their homeownership to someone they care about.  

Sometimes, a quitclaim’s simplicity brings potential pitfalls that deed holders would want to avoid. So, let’s take a look at what seniors may want to think about before they create the quitclaim deed.

Why Caution Is Advised

A quitclaim deed passes an ownership interest in a piece of property to someone else. Unlike the warranty deed, a quitclaim does not assure the next deed holder of a free and clear title. In fact, it only transfers what the transferor owns — which could be nothing!

Quitclaims do prove handy among loved ones. A deed recipient who’s familiar with the home might not need a title agent to give them peace of mind about the title history. In most jurisdictions a recorder of deeds will simply record a quitclaim deed, not investigate its validity.

So, deed holders need to grasp the potential for a quitclaim deed to be the subject of fraud or misuse. Or quitclaiming can simply be a mistake — if another form of transfer would’ve been more advantageous.

“In case something happens to me…” Sometimes, a senior will give a deed to someone else to hold — to be recorded only after the homeowner’s death. Don’t be that senior.

Family Matters: Consulting the People Involved

It’s a wonderful idea to be sure everyone involved (or might believe they should be involved) is on board with your plans. Preparing people is the better way to safeguard family harmony. And be sure your recipient can deal with the gift of homeownership.

Your chosen recipient is, of course, allowed to refuse the deed.

Also, talk through your reasoning to transfer the title now, rather than through your will. Using a will allows for a “stepped up” cost basis. If your recipient wishes to sell the home, that’s a benefit because it reduces capital gains tax on a real estate sale.

Not that your options are limited to either a quitclaim deed or a last will. A popular alternative is the living trust. Many homeowners do use the quitclaim deed to put property into trusts (or into family-run businesses).

Dangers of Quitclaiming in Certain Scenarios

Scammers abuse quitclaims.

• Some tricksters use them in the course of pretending to help struggling seniors whose homes go into foreclosure.

• Some swindlers tell distressed homeowners to quitclaim their deeds, and rent to buy back their homes later. Homeowners who agree to this lose their ownership. Their mortgage debt remains.

Only a lawyer can require a fee up front to rescue a mortgage. The money must go into a trust account overseen by your home state.  

But as a first step, overwhelmed borrowers should talk to their loan servicers directly to discuss their options.  

And That’s a Wrap

Quitclaims are common in transfers of homes to loved ones. A quitclaim might be the perfect deed in a particular situation.

Deeds.com can help you quitclaim the deed to a home if the situation calls for it. As you might assume, every deed transfer happens in a context that’s unique to the parties’ situations. Tax implications, family relationships, and the state of the home’s title are all relevant.

This article doesn’t substitute for the advice of an attorney in your home’s state.

One risk an attorney can reduce? The potential for anyone to claim you faced undue influence to transfer your home to whomever you’re naming on the new deed. Plus, an attorney can help you compare the benefits of using a trust or life estate deed instead. In many situations, a will or trust is better at protecting home equity from creditors, tax collectors, and family tensions.