The Advantages and Disadvantages of Quitclaim and Warranty Deeds

There are four facets for a property deed to be legal in the State of Illinois. The deed must entail grantor and grantee names, which is the property owner and new owner. It must also recognize the transferred property and stipulate what the grantor collects in return.[1]

Finally, the process is complete once the grantor signs the deed. The deed is legal once the Illinois quitclaim deed or warranty deed entails those aspects. Naturally, the Illinois quit claim deed and warranty deed are considered depending on one’s needs and circumstances.[2]

A quitclaim deed and a warranty deed both have advantages and disadvantages. Here are a few to consider:

Advantages of a Quitclaim Deed

• A quitclaim deed doesnt have to be drawn up by a lawyer[3]. You simply download a free form directly from your county clerk’s website and submit it on your own.
• A quitclaim doesnt ruin your credit. However, you’re still responsible for the mortgage loan thats associated with the property.[4]
• It can offer a property tax benefit.  When you quitclaim a deed to another individual, you are no longer responsible for paying property taxes for that particular property.

However, you should consider getting a valuation of your property before signing a quitclaim. In the past, people would quitclaim a house for a considerably low amount or a good and valuable consideration. Today, tax authorities require that the transfer taxes are assessed according to the value of the property.[5]

Disadvantages of a Quitclaim Deed

• A quitclaim does not release a person from a mortgage. A lender can still sue a borrower if he/she defaults on a loan. As mentioned previously, a borrower is still responsible for paying back a mortgage loan.[6]

• The homeowner loses his/her investment in the property and he also loses the income from the property.[7]

Advantages of a Warranty Deed

• A warranty deed protects you against potential problems in the future, such as back taxes or unforeseen issues with the title. It can also protect you from unpaid home improvement bills.[8]

• If anything contradicts any of the warranty deeds promises, the transferring party has breached the deed and is held liable to suit. The new homeowner can actually sue the transferor, if he/she experiences problems.

Disadvantages of a Warranty Deed

• A warranty deed provides warranty of a title for the amount of time the grantor owned the house. If you gain property by a warranty deed, make sure you hire a professional title examiner to thoroughly check the deed. You should also check for any kind of legal problems that may affect the property.[9]

Varying Levels of Protection

The standard tool when money is exchanged from one hand to another with the title is a warranty deed.

A special or limited warranty authorizes the grantor to be responsible if the individual does anything to ruin the title. The general warranty deed makes the grantor responsible even if the problems of the title stems from the previous owner. Thus, a limited deed is effective when it has explicit language to state the limits.

Costs Associated with Filing a Warranty or Quitclaim

To file a Warranty or Quitclaim in Illinois, it cost $42.00 for the first four pages and $1.00 each additional page. You can download a free form directly from the Kane County Recorder website or from any website.[10]

Is a Title Insurance Policy Necessary for Both Deeds?

Deeds are typically characterized based on the sort of warranties in title delivered by the grantor. For example, the general warranty deed provides the highest protection level to the buyer, while the quitclaim deed often provides the least in an Illinois buyer protection.

Both deeds can benefit from a title insurance policy, but for the quitclaim deed, it can protect you from claims in the future from anyone who may have interest or property lien before you purchased the property. [11]

As you can see, there are various differences between a Quitclaim Deed and a Warranty Deed in Illinois.

www.atgf.com/tools-publications/pubs/deed-elements-and-recording-requirements  (last visited 11/12/13)

www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2137&ChapterID=62 Illinois General Assembly

www.realtor.com/home-finance/homebuyer-information/what-is-a-quitclaim-deed.aspx?source=web By Ben Apple