Q I am writing in reference to your article published Feb. 15, 2004 called “Quitclaim deeds have specific purposes.” In that Q&A, the fiance wanted to file a quitclaim deed to separate himself from his future wife’s ownership of the house. Our case is almost the opposite. My wife owned a house prior to our marriage. After we got married, she filed a quitclaim deed to add myself as a co-owner to the house. Is this also a correct and legal use of the quitclaim deed? Additionally, because quitclaim deeds offer no warranties, does my wife’s original title insurance still protect her, myself, or both? – Matt, Fairfax, VA
A Quitclaim deeds are one of the most misunderstood documents in real estate, so it’s useful to go over this again for readers who may have missed the previous column.
First, let me explain what a quitclaim deed is. As its name implies, if I were to grant you a quitclaim deed to Safeco Field, that means I would be quitting any legal ownership interest that I may have in that property and transferring my ownership interest to you. That is all that a quitclaim deed does. There is no warranty that I have any ownership interest in Safeco Field, I am simply giving you whatever interest that I may have. Since I don’t own any legal interest in Safeco Field, the quitclaim deed would be a worthless piece of paper.
By contrast, a warranty deed is a type of deed in which the people granting the deed warrant that they are the legal owners of the property being transferred to the buyer. That’s why most real estate transactions in this state use a warranty deed. Quitclaim deeds are usually used only between parties who know each other well and don’t need proof that the grantor of the deed actually owns the property. A common example is a divorce, where the jointly owned home is transferred from the married couple to one spouse.
In your case, your wife used a quitclaim deed to add your name to the title of the house after your marriage. That is another common use of a quitclaim deed and it is perfectly legal. However, your wife’s title insurance policy does not protect you because you were not on title when that policy was issued.
The purpose of title insurance is to identify all liens and ownership claims against a specific property as of a certain date. When you buy a home, the title insurance insures clear title up to the date that the purchase and sale transaction closes. In the case of a refinance, title insurance insures clear title up to the date that the new mortgage loan closes.
Unless you purchased a new title insurance policy when your wife recorded the quitclaim deed adding you to the title on the property, you would not be covered.
But again, like the quitclaim deed, that is not a problem if the transaction is between related parties.
I assume that you are aware of any loans or liens that existed against the property at the time your name was added to the title, so it’s not a big deal. Your wife is the person who is most at risk in this transaction because adding your name to the title of the property does not add your name to the mortgage on the property.
The loan is in your wife’s name only, so you have the best of all worlds: You are part owner in the home but you have no obligation to make the loan payments. If you refinance the mortgage on the home in the future, you will both be required to sign the loan documents because you are both now on title to the property.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206. Fax questions to Tytler at 425-339-3435, or e-mail him at economy@heraldnet.com
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