Buying or selling real estate, whether of a commercial, residential, or agricultural nature, is exciting but brings with it a host of considerations that may affect the parties involved in the transaction for years to come. Real estate investors, business owners, and families need to know about two of the main types of written legal instruments that transfer real property rights from one owner to another (and how they differ): quitclaim deeds and warranty deeds. Since our law firm is located in the state of Kansas, let’s take a look at what Kansas courts have to say about this topic.
When there is no doubt about who owns a property and what rights he, she, or it has to the property, a general warranty deed is typically used. “In nearly all cases between individuals where land is sold or conveyed, and where there is no doubt about the title, a general warranty deed is given; and it is only in cases where there is a doubt concerning the title that only a quitclaim deed is given or received[.]” Schwalm v. Deanhardt, 21 Kan. App. 2d 667, 671, 906 P.2d 167, 171 (Kan. Ct. App. 1995) (citing Johnson v. Williams, 37 Kan. 179, 182-83, 14 P. 537 (1887)). A real estate owner wanting to sell his or her property must determine whether there are any doubts as to his or her ownership rights before selling the property in question. Situations in which there are doubts as to title often make the use of a quitclaim deed a better fit.
While the property seller may be doing the right thing by using a quitclaim deed in a situation of doubtful or unclear title, the potential buyer of the property may not be so quick to agree. “[W]hen a party takes a quitclaim deed, he knows he is taking a doubtful title and is put upon inquiry as to the title. The very form of the deed indicates to him that the grantor has doubts concerning the title; and the deed itself is notice to him that he is getting only a doubtful title.” Id. The mere presentation of a quitclaim deed, or a real estate contract containing quitclaim deed language, may be enough to dissuade a potential buyer from entering into the deal. Said buyer would know (or should know) that he would be taking doubtful title, or, said differently, that the grantor (seller) has doubts concerning title. Unless the property under consideration were truly unique, the buyer might decide to pass and explore purchase options for which title is certain.
The warranty deed versus quitclaim deed decision should not be viewed as one that merely applies to the here and now. An incorrect decision made by either party can last and cause problems for many, many years. “The difference between a warranty deed and a quitclaim deed lies not in the number of encumbrances listed in the deed but in the level of protection the recipient of the property receives from the person conveying the property, i.e., the grantor warrants that the title to the property is exactly what it purports to be.” National City Mortg. Co. v. Brinkley, 209 P.3d 764, 764 (Kan. Ct. App. 2009) (unpublished) (citing 14 Powell and Rohan, Powell on Real Property § 81.03[a] (2000)). “A warranty deed provides certain covenants of title, which, if violated, subject the seller to suit for damages.” Id. (citing 14 Powell and Rohan, Powell on Real Property § 81A.03[b][i]). “In contrast, a quitclaim deed merely purports to convey whatever interest the landholder possesses.” Id. (citing 14 Powell and Rohan, Powell on Real Property § 81A.03[c]). The level of protection that a buyer receives from a seller of real estate, and the level of protection that a seller of real estate owes to its buyer, is significantly higher when using a warranty deed. For transactions in which warranty deeds are used, the seller (grantor) warrants that the title to the property is exactly what it purports to be. Sellers subject themselves to lawsuits for damages if covenants of title provided through warranty deeds are not satisfied. Sellers concerned about not satisfying those covenants of title can use quitclaim deeds, through which they are merely conveying whatever interest they possess.
One wonders whether quitclaim deeds “work” as well as warranty deeds with respect to transferring property rights. Wonder no more: they do. “A quitclaim deed, however, will convey the present interest of the grantor in the premises as effectually as any other instrument. The chief distinguishing feature between this kind of a deed and other forms of conveyance is that it furnishes notice to the grantee of outstanding interests and equities additional to those of which constructive notice is imparted by the public record. If the grantor holds the full title to the premises, a quitclaim deed will convey the complete estate[.]” Ennis v. Tucker, 78 Kan. 55, 59, 96 P. 140, 142 (Kan. 1908). Missouri courts principally concur: a quitclaim deed “is as effectual to transfer title as any other form of conveyance, and conveys every shred of right, title or interest the grantor may have in the premises.” Crenshaw v. Crenshaw, 276 Mo. 471, 471, 208 S.W. 249, 249 (Mo. 1918) (citing McAnaw v. Tiffin, 143 Mo. 676). Quitclaim deeds convey rights to properties as effectively as warranty deeds. If the seller holds full title to the real estate, a quitclaim deed will transfer every bit of title he has in the property to its buyer.
Here at Kincaid Business & Entrepreneurial Law, LLC ®, we enjoy advising homeowners, entrepreneurs, and investors about their real estate law matters. The decision to buy or sell a property via a warranty deed or a quitclaim deed is just one part of the advisory process. Please contact us at 913-735-7707 if we can be of service to you, your business, or your family.
Matthew T. Kincaid