Comparing Quitclaim Deeds and Warranty Deeds

warranty deed vs quitclaim deed

Transferring property can be complicated, especially when choosing the right deed. As an experienced Texas real estate law firm, we’ve seen many clients wrestle with deciding between a quitclaim vs. warranty deed when preparing for a major transaction. It’s an important decision with significant implications for buyers and sellers alike.

To help you make an informed choice, we’ve compiled this guide comparing quitclaims and warranty deeds in Texas. We’ll overview how each deed works, the critical differences between them, examples of when to use each, and factors to consider before selecting a deed.

Whether you’re gifting a family property, selling real estate, or being involved in another major transaction, understanding quitclaim vs. warranty deeds can save you headaches and money down the road. Let’s take a closer look at how these two types of deeds differ.

What Exactly Are Quitclaim and Warranty Deeds?

Let’s start by reviewing what quitclaims and warranty deeds are.

Quitclaim Deeds Explained

A quitclaim deed transfers whatever ownership interest the current owner (the grantor) has in the property to someone else (the grantee). The deed conveys the grantor’s rights to the property in an “as is” condition without any guarantees or warranties.

For example, if you, as the grantor, own 50% of a home, a quitclaim deed would convey only that 50% share – not the entire property. The deed doesn’t affirm the validity of the grantor’s title or whether other ownership claims exist. It simply passes along whatever interest the grantor currently holds.

Given the limited protections, quitclaim deeds are most appropriate between parties who trust each other or have a close relationship. Quitclaim deeds are often used when transferring property rights to a family member, gifting property into a living trust, releasing marital property rights in a divorce, or changing a business title after a merger.

In low-risk scenarios like those, the lack of title assurances may not be a major concern. However, for real estate sales or transfers to unrelated parties, the minimal guarantees of a quitclaim deed leave the grantee vulnerable.

Warranty Deeds Explained

Where quitclaim deeds provide limited security, warranty deeds offer full legal protection to grantees – or buyers – after a property changes hands.

A grantor who transfers property by warranty deed makes several legal guarantees about the title quality and their right to convey the real estate. These warranties give the grantee recourse if issues like title defects, unknown liens, or conflicting ownership claims arise.

The main warranties included in a Texas warranty deed are:

  • Covenant of seisin – This guarantees the grantor owns the property and has the right to convey it. If not, the grantee can take legal action against the grantor.
  • Covenant against encumbrances – The grantor warrants no undocumented liens, mortgages, or other debts exist on the property. The grantor would be responsible for paying any undisclosed obligations.
  • Covenant of quiet enjoyment – This indicates the grantee can occupy the property undisturbed. The grantor must defend against any outside claims against the grantee’s rights.
  • Covenant of general warranty – The grantor must compensate the grantee if other parties dispute title ownership in the future, even after the transfer occurs.

Thanks to these robust warranties, warranty deeds offer near-ironclad protection for buyers against title defects and related legal issues. That security is why warranty deeds are standard for most real estate transactions.

Key Differences Between Quitclaim and Warranty Deeds

Now that we’ve covered the basics of quitclaim deeds and warranty deeds, let’s recap the core differences between the two. Having a clear grasp of how these deeds diverge is crucial for making an informed decision when transferring property.

The key distinctions include:

  • Interest transferred – A quitclaim deed conveys only the grantor’s current ownership share, which may be incomplete. A warranty deed transfers the property in its entirety.
  • Warranties and protection – Quitclaim deeds provide zero warranties or protection for the grantee. Warranty deeds include several legal guarantees defending the grantee’s title.
  • Common uses – Typically, quitclaim deeds are used for lower-risk transfers between related parties. In contrast, warranty deeds are used for real estate sales and high-value transactions involving unrelated grantees.
  • Grantee risks – With a quitclaim deed, all risks remain with the grantee. Warranty deeds shift responsibility to the grantor if title disputes arise.

As you can see, warranty deeds offer far greater security for property buyers – but that added protection comes with obligations for the seller. We’ll explore how to choose the right option next.

Is a Quitclaim or Warranty Deed Right for Your Situation?

When preparing a property transfer in Texas, how do you decide whether to use a quitclaim or warranty deed? Here are vital factors to consider:

  • Value of the property – For high-value real estate, spending more for a warranty deed makes sense. For modest transactions like gifting a vacant lot to a relative, a quitclaim deed may suffice.
  • Relationship of grantor and grantee – Transfers between family or business partners with an established trust may not require warranty deed guarantees. Unrelated buyers will expect warranties for their protection.
  • Concerns over title or ownership – If there are doubts about the grantor’s full rights to the property, a warranty deed helps shield the grantee from risks.
  • Time for due diligence – Quitclaims allow faster transfers, while warranty deeds involve thoroughly verifying clean title before closing.
  • Grantor’s financial situation – Grantors must be able to financially cover warranty deed obligations later. Quitclaims free grantors from future liability.
  • Grantee’s risk tolerance – Grantees must be comfortable accepting all risks of title defects with quitclaim deeds.

While those factors provide guidance, the best deed option still varies case by case. Some examples of when to consider each type of deed:

Quitclaim deeds are reasonable for:

  • Removing an ex-spouse from a home title after divorce
  • Gifting a property between family members
  • Settling an estate between heirs
  • Transferring real estate into a living trust

Warranty deeds make more sense for:

  • Sale of an investment property or commercial real estate
  • A home purchase transaction with bank financing
  • Transferring land with known title disputes or defects
  • Sale of high-value property between unconnected parties

For large transactions or deals with non-family, warranty deeds should dominate. But even then, nuances apply. An experienced real estate attorney can offer legal guidance.

Consult Our Texas Real Estate Attorneys About Warranty and Quitclaim Deeds

When transferring property in Texas, few decisions are more critical than correctly selecting between a quitclaim or warranty deed. The deed you choose impacts both the buyer and seller.

At The Titus Law Firm, our lawyers have years of experience guiding clients through major real estate transactions across Texas. We understand the nuances of determining when a quitclaim or warranty deed makes sense.

Our legal team takes a hands-on, personalized approach to every client. We’ll carefully evaluate your unique situation and risk factors. Then, we’ll offer trusted advice on the ideal deed to secure your interests during the property transfer.

If you’re facing the quitclaim vs. warranty deed decision in Texas, don’t go it alone. Schedule a consultation with our firm today. Let our experience provide the clarity you need to transfer property smoothly and securely. The right deed can make a big difference down the road. Trust the guidance of a skilled real estate lawyer to help safeguard your transaction.

Author Bio

Eddison S. Titus

Eddison S. Titus is the Founder of The Titus Law Firm, a Houston estate planning, business law, and real estate law firm he founded in 2016. He has successfully represented clients in a wide range of legal matters, including will and trust creation, probate, real estate transactions, business formation, business and contract disputes, and business succession planning.

Eddison received his Juris Doctor from the Charlotte School of Law and is a member of the State Bar of Texas.

LinkedIn | State Bar Association | Avvo | Google