warranty deed vs quit claim deed know the difference
Warranty Deed Vs. Quitclaim Deed - Know the Difference
While both these deeds are important documents for property sale transactions, their functions and features are distinctly varied, which is why the warranty deed vs. quitclaim deed analysis given below serves to elaborate on their differences.
WARRANTY DEED | QUITCLAIM DEED |
Tax Advantage | |
There are no tax advantages in this type of deed. | As property is transferred from one family member to the other, the transaction is treated as gift and, thus, has tax benefit. |
Ownership | |
It guarantees seller's ownership of the property. | This does not guarantee or assure the grantor's or seller's ownership. |
Warranty | |
Yes, the grantor or seller claims that he owns clear and legal title of the property. | No, the grantor does not warrant that he owns clear and legal title to the property. |
Transfer of Title | |
The seller of the property warrants that the property he owns is free of any kind of liens, lease, and encumbrances. | The owner merely transfers the title of what he owns to another party. |
Utilization | |
During sale of property, this deed is made use of. | This deed is not used during sale, rather is when the grantor is bequeathing the property after his death, adding spouse's name to title, removing spouses name after divorce, or transferring it to a revocable trust. |
Legal Protection | |
The level of legal protection to the buyer is high. | The level of legal protection to the grantee is low. |
Risk Factor | |
The transaction has a lower risk. | The transaction may have higher risk. |
Lien | |
If there is any discrepancy in the facts mentioned in the warranty deed like change in area, name of the owner, forgotten lien, etc., the buyer may sue the former owner. | If there are any problems with the title or a forgotten lien on the property, there is little legal help for the grantee. |
Damages | |
The buyer is entitled to get a compensation for the damages. | The grantee does not have any right to claim compensation. |
Insurance | |
Warranty deeds can be backed by title insurance. | Quitclaim deeds cannot be backed by title insurance. |
Parties | |
The parties in this transaction have a buyer and seller relation, and may not necessarily know each other. | This transaction may occur between parties who are well-acquainted or even related to each other. |
Significance | |
It will work well in all property sale transactions provided the property has a clear title without any obligations. Also, the owner has complete ownership of the property. | They work well where the property is transferred from one family member to the other, and both parties know the details of this transaction; a third party is not involved. |
Chances of Fraud | |
Chances of fraud are limited as the seller will have to compensate (you) for damages, if any clause in the deed is false. | There are chances that you can end up paying for a property that the seller does not own in the first place. |