One of my mortgage clients was facing divorce and asked me for advice about a quit claim deed that their ex gave to sign. Thank goodness she did because she was about to get screwed and didn’t realize it. You can learn from this story too…
What Is A Quit Claim Deed?
A quitclaim deed (many people call it a “quick-claim” deed in error) is a legal document that transfers ownership and rights in a real property (house, land, condo, etc.) from one person to another.
I think people assume it is called a “quick-claim” deed because, in fact, it can be done quickly. It is just a simple one page document that gets signed and then you go record it at the county office so it is on public record.
You don’t really need a lawyer (I wouldn’t advise that) because you can find a suitable template to follow on the Internet just by copying an existing quit claim deed from public records that a law firm already did.
There aren’t any checks and balances in place to protect people when it comes to a quitclaim deed so once it is signed and recorded with the county, it’s a done deal. Unsuspecting people (like my mortgage client) could be royally screwed if they trust the person asking them to sign the quit claim deed.
Quitclaiming Your House Could Be A Scam
My mortgage client was being asked to sign a quitclaim deed by their ex – someone they lived with and trusted. The mortgage loan on the house they had was only in my client’s name. They were in default on the mortgage and facing foreclosure.
Their house mate asked my client to sign a quitclaim deed and transfer the property over to them. What my client didn’t realize is that a quitclaim deed does not transfer the responsibility for the mortgage, just the property itself.
Had they signed the quit claim deed without consulting someone first, they would have still been stuck with the mortgage and foreclosure but on a property that they waived all their ownership rights to.
That’s the scam that some people run. They get you to sign a quitclaim deed when you are in distress to “take the problem off your hands”. In reality, all they are taking is the property, not the debt mess associated with it. The debt stays in the original owner’s name to deal with in court when foreclosure proceedings begin.
In tomorrow’s DailyDollar we will look at the potential impact upon your credit score when you sign a quitclaim deed.