The difference between a Grant & Quitclaim deed is a common question raised by many of our first-time real property buyers and sellers.
The confusion is understandable since the differences are subtle and may seem innocuous to a legally untrained eye. However, such differences are critical and important due to long-term consequences when transferring real property in California.
To start off, a real property “deed” is the legal document that transfer the “title” to (the legal ownership) of real property from one to another. This is the document that actually transfers the ownership of the property, not the real estate purchase contract.
Under current California law, real property deeds may either be Grant deeds, Quitclaim deeds, or Tax deeds (Tax deeds being addressed in a separate blog post article). (See CA. Civ. Code §1091 et seq.)
A “Grant deed” is a deed that contains certain implied covenants (legal promises) that the grantor (the seller) has not done certain things during its time of ownership. The covenants are implied since they do not have to be expressed or written out in the Grant deed to be effective. The Grant deed’s implied covenants include that the Grantor has neither (i) conveyed the same real property, or any rights or interests within that real property to any other person, other than to the current purchaser under the transaction; and (ii) that the real property, at the time of execution of this transaction, is not subject to any encumbrances (i.e. liens, mortgages, easements, property tax liens) that were created or made by the grantor/seller. (see CA. Civ. Code 1113). The key subtle term in the latter covenant is that the risk of encumbrances is only based on the current Grantor/seller having made any encumbrances, and is not a covenant as to any previous encumbrances created by seller’s prior to this Grantor here. Regardless of the implied warranties, the purchaser will take title to the property subject to all existing encumbrances (such as a encumbering deed of trust/mortgage) whether or not the deed so provides. (see Nguyen v. Calhoun, 105 CA.4th 428, 428.) If any of the implied covenants turn out to not be true at the time of the close of the transaction, then the purchaser will have a right to immediately bring an action for breach of the implied covenants and seek relevant damages.
A “Quitclaim deed” is a deed that does not contain any implied covenants from the grantor. A Quitclaim deed transfers or “releases” to the Grantee (purchaser) whatever present rights or interests that the Grantor/seller has, which is the equivalent of an “as-is” sale, as in the Grantor/seller is conveying/selling/transferring the real property with whatever ownership/interests it has, if any at all, including any faults. The major risk being, that if the Grantor/seller actually does not have any legal ownership/title to the real property sold, then the purchaser/Grantee will likewise receive nothing. (See Osswald v. Anderson 49 CA.4th 812, 820.)
Ultimately, it is important to have an experienced attorney review all deeds in real property transactions to ensure that the parties understand what they are or not receiving and what warranties and liabilities may be included in such.
At KAY GHAD LLP, we are dedicated to assisting, counseling and representing purchasers and sellers in their real estate transactions while mitigating their financial and legal risk. For help in your real estate transaction, please contact us at [email protected] or (213) 529-2900.
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