{"id":658,"date":"2019-04-26T07:00:55","date_gmt":"2019-04-26T11:00:55","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=658"},"modified":"2024-04-25T23:21:05","modified_gmt":"2024-04-26T03:21:05","slug":"dont-quit-your-claim-a-quitclaim-deed-is-not-a-mortgage-saving-or-estate-planning-tool","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/dont-quit-your-claim-a-quitclaim-deed-is-not-a-mortgage-saving-or-estate-planning-tool\/","title":{"rendered":"Don\u2019t Quit Your Claim! A Quitclaim Deed Is Not a Mortgage Saving or Estate Planning Tool"},"content":{"rendered":"\n
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A quitclaim deed\nconveys\u2014”quits”\u2014a person\u2019s interest in a property to someone else.\nQuitclaims prove useful in certain transfers of properties among family members\nor between divorcing spouses. The quitclaim allows separating partners to\nfollow a court\u2019s direction and leave one party as sole owner of the marital\nhome. Quitclaims might seem convenient in other circumstances, but they are\nrarely the best choice. <\/p>\n\n\n\n

In contrast to\nthe warranty deed<\/a>, a quitclaim deed offers no assurances of\nclear title. In most jurisdictions a recorder of deeds must simply\nrecord a quitclaim deed; it is not the recorder\u2019s role to investigate the\ncircumstances of the conveyance.<\/p>\n\n\n\n

Scammers may take advantage of the quitclaim\u2019s\nsimplicity<\/a> to siphon equity\nfrom vulnerable people. After recording a quitclaim, a bad actor may sell\nthe property with no guarantees, rent it under false pretenses, or exploit its\nunderlying value as collateral.<\/p>\n\n\n\n

Spot the Mortgage Relief Scam<\/h2>\n\n\n\n\n\n\n\n

The quitclaim may be the deed of choice for scammers preying on people struggling to make their mortgage payments<\/a>, too. There are a number of well-worn tricks. Tricksters scour the public foreclosure notices, find their targets, and then write to specific homeowners. Others advertise more widely, with “Stop foreclosure!” notices. The con artist or fake company might claim to be a \u201cforensic auditor\u201d or a bank. Some scammers say they are affiliated with the government. Many tout a money-back guarantee.<\/p>\n\n\n\n

They might have the\nhomeowner sign papers to get a modified loan, supposedly to reduce the monthly\nmortgage payment. Buried in the middle of the paperwork is an agreement to\ntransfer the title.<\/p>\n\n\n\n

Other shady actors\ntell distressed homeowners outright to quit their interest on the titles and\nbecome renters to buy back their homes later, after building better credit.\nSoon, the residents may face unmanageable rent increases\u2014after\nplacing their homes in a villain\u2019s hands.<\/p>\n\n\n\n

Other ploys persuade\nowners to sign quitclaim deeds, move out, and await a promised portion of the\nhome sale proceeds. Then the manipulators let the home foreclose, while\nrenting it out or otherwise exploiting its value. The duped owners have given\naway their interests in the real estate\u2014but kept their mortgage debts.<\/p>\n\n\n\n

A homeowner who needs a loan modification or other mortgage assistance should call the current mortgage lender directly and ask for options. The government may offer other workable foreclosure relief options<\/a>.<\/p>\n\n\n\n

Note that the Mortgage\nAssistance Relief Services (MARS) Rule directs mortgage assistance companies\nto state the client\u2019s total fees up front. The rule bars companies from\ntaking fees before an owner gets an offer from a real lender\u2014and accepts it.<\/p>\n\n\n\n

A different standard\napplies to lawyers. A lawyer offering genuine legal assistance can require a\nfee up front. The lawyer must be licensed in the homeowner\u2019s state and must\ndeposit the homeowner\u2019s payments in a client trust account. The lawyer may\nwithdraw the client\u2019s money only when completing legal services, and must\nnotify the client of every withdrawal from the trust account. Homeowners should\ncarefully research the credentials of mortgage relief providers that hold\nthemselves out as legal professionals.<\/p>\n\n\n\n

Bottom line:\nlegitimate mortgage assistance businesses do not require the homeowner to\nconvey an ownership interest.  <\/p>\n\n\n\n

Quitclaims Are Not an Alternative to Probate<\/h2>\n\n\n\n
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Many parents hope to transfer a home to their adult children. A quitclaim deed may seem easy. Yet the Internal Revenue Service takes a hard look at parent-to-child property transactions. The IRS imposes a gift tax<\/a> on real estate with a higher fair market value than the permitted annual exemption. Moreover, a quitclaim giveaway means the child gets the property at the value the parent paid. A beneficiary to the will, in contrast, gets a \u201cstepped up\u201d cost basis\u2014which means relief from ultimately large capital gains taxes.<\/p>\n\n\n\n

Some parents have\ngiven deeds to children or other relatives to hold \u201cin case something happens\nto me\u201d\u2014that is, to save and record after the homeowner\u2019s death. Risks\nabound in this form of casual estate planning.<\/p>\n\n\n\n