Purpose

• If you want to give or sell the title of your real estate to someone else, you can file a quit claim deed. This deed contains much of the same information as the original deed and releases the current owner's interest, or partial interest, in the property. Some instances where this document may be used would be in a divorce or a transfer of property from one family member to another. There also may be a situation where property is transferred into a living trust or a type of company, whether a limited liability corporation or others. A quit claim deed does not guarantee that the title is free of liens or that the owner even has a right to transfer it.
  
  

Mortgage Impact

• Any liens on a property, where interest is transferred via a quit claim deed, do not disappear. The person or persons whose names are on the mortgage to the real estate relinquish the right of use for the property but continue to be obligated for all mortgage loans or liens that remain on the title. The only way to be relieved of your contractual commitment is to refinance the mortgage or pay it off.
  
  

Warnings

• Most title insurance companies will not be willing to guarantee a lien-free title and ownership in the case of quit claim deeds. Therefore, the new owners on the title cannot ensure that there are no encumbrances when they take it over. If they later find that there are, it may be costly to have them removed in order to sell the property. If you are the grantor, you must ensure that the grantee will refinance or obtain new financing on the property. Ideally, this would occur before the transfer but may happen after. If it fails to occur, you remain responsible for the debt.
  
  

Considerations

• If a home is sold in the traditional way through a title company, then the owners on the deed are automatically relieved of the mortgage debt at the close of the transaction when a new loan is taken out on the property or the purchasers pay cash. If a loan remains on the title of your house after the deed is transferred and the grantee commits to paying it on time each month, your credit rating will be affected if the new owner neglects to fulfill that obligation. Any contractual agreements made should be placed in writing and signed by both parties. It is advisable to consult with a real estate attorney prior to releasing your interest in the property.