Quit Claim Deed
Also known as: quitclaim deed, quitclaim, quit claim
A quit claim deed is a legal instrument that transfers whatever interest a grantor holds in a property to a grantee, without any warranty or guarantee that the title is clear or that the grantor actually owns the property. Unlike a warranty deed — which includes the grantor's promise that the title is free of defects and encumbrances — a quit claim deed simply conveys whatever interest exists, if any. The grantee receives the property "as is" from a title perspective, and all existing liens, mortgages, judgments, and other encumbrances remain attached.
How a Quit Claim Deed Works
A quit claim deed transfers ownership through a simple legal mechanism:
- The grantor identifies the property (by legal description and/or address)
- The grantor signs the deed, transferring their interest to the named grantee
- The deed is notarized and recorded at the county recorder's office
Once recorded, the transfer is part of the public record and the chain of title. The critical distinction is what the grantor is not promising: they make no guarantee that they actually own the property, that no other parties have claims, or that the title is free of defects. If the grantor has full ownership, the grantee receives full ownership. If the grantor has no interest at all, the grantee receives nothing — and has no legal recourse against the grantor for the empty transfer.
Quit Claim Deed vs. Warranty Deed
The difference between these two deed types has direct consequences for note investors evaluating a property's title history:
| Feature | Quit Claim Deed | Warranty Deed |
|---|---|---|
| Grantor's guarantee | None — transfers only whatever interest exists | Full — grantor warrants clear title and will defend against claims |
| Lien survival | All existing liens survive the transfer | Liens are typically satisfied at closing; title company verifies |
| Title insurance | Not typically issued based on a quit claim | Standard practice — title company insures the new owner |
| Common use | Family transfers, divorce settlements, trust transfers | Arm's-length real estate sales |
| Risk to grantee | High — no recourse if title defects exist | Low — grantor is liable for undisclosed defects |
Why Quit Claim Deeds Matter for Note Investors
Quit claim deeds appear frequently in non-performing loan files and are one of the most common reasons the borrower name on a data tape does not match the current property owner in county records. Understanding what a quit claim deed means for your lien is essential for accurate due diligence.
Your Lien Survives
Because a quit claim deed includes no warranty and no title clearing process, all existing mortgages, judgment liens, tax liens, and other encumbrances remain attached to the property after the transfer. If a borrower quit claims their property to a child, spouse, or LLC, your mortgage or deed of trust is still secured against the property. The new owner takes the property subject to all existing liens — they inherit the encumbrances along with the ownership.
This is a fundamentally different outcome than a warranty deed transfer, where the title company typically requires all liens to be satisfied before closing. A property transferred via warranty deed to a third party where your mortgage was not satisfied raises serious concerns about your secured status.
Common Quit Claim Scenarios in NPL Investing
| Scenario | What Happened | Impact on Your Lien |
|---|---|---|
| Borrower to spouse | Transfer during marriage or divorce | Lien survives — your position is unchanged |
| Borrower to family trust | Estate planning transfer | Lien survives — your position is unchanged |
| Borrower to child or relative | Informal family transfer | Lien survives — your position is unchanged |
| Borrower to LLC | Asset protection or business structuring | Lien survives — may trigger due-on-sale clause |
| Between former spouses in divorce | Court-ordered transfer of marital property | Lien survives — divorce decree does not extinguish mortgages |
Title Research Implications
When you find a name mismatch during title research — the borrower on the tape is "John Smith" but the current owner per county records is "Jane Smith" or "Smith Family Trust" — the next step is to search the recorder's office for the most recent deed transfer. If the transfer was via quit claim deed, your lien is almost certainly intact and the loan remains workable.
If the transfer was via warranty deed to an unrelated third party, the situation requires further investigation. Your mortgage should have been satisfied as part of that transaction. If it was not, there may be a title insurance claim or a cloud on title that needs legal resolution.
Limitations and Risks
A quit claim deed offers the grantee no legal protection. Common risks include:
- The grantor may not actually own the property — the deed transfers nothing, and the grantee has no recourse
- Undisclosed liens and encumbrances transfer with the property — the grantee inherits all problems
- No title insurance — title companies generally will not issue a policy based solely on a quit claim deed
- Cloud on title — a quit claim deed from someone who is not in the chain of title can create title defects rather than resolve them
For these reasons, quit claim deeds are appropriate for transfers between known parties — family members, business partners, divorcing spouses — where the relationship and the title status are already understood. They are not appropriate for arm's-length purchases where the buyer needs assurance of clear title.
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