California Requirements for Quitclaim Deeds

Quitclaim deeds in California

A quitclaim deed in California is a legal document that transfers whatever ownership interest you have in a property, without guaranteeing you actually own it. Unlike a grant deed (California's version of a warranty deed), a quitclaim deed offers no protection if title problems arise later. This makes quitclaim deeds risky for buyers but useful for transfers between people who already trust each other.

Grantors generally use a quitclaim deed in specific situations, including:

• Transferring property from a parent to a child
• Transferring property to a spouse in a divorce
• Transferring property into a living trust
• Transferring property to an LLC

The key issue with a quitclaim deed is that the grantee should have absolute trust in the grantor. If that trust doesn't exist, the grantee shouldn't accept a quitclaim deed.

Keep in mind that California quitclaim deed forms vary from county to county, so get the form from the county where the property is located.

How to file a quitclaim deed in California

Filing a quitclaim deed in California is relatively straightforward. Here's what you need to do:

1. Fill out the quitclaim deed form (available from the county where the property is located)
2. Get the deed notarized by a licensed notary public
3. File a Preliminary Change of Ownership Report
4. File a Documentary of Transfer Tax or a Notice of Exempt Transaction
5. Submit all documents to the county Recorder's Office

You can find the necessary forms at your County Clerk's Office, Recorder's Office, or Assessor's Office.

In California, warranty deeds are called grant deeds 

A warranty deed is a type of deed in which the owner guarantees he has a good title to the property and the property is free and clear of liens and other encumbrances. Because a warranty deed shows that the grantor, or person making the transfer, actually owns the property, it is the type of deed most often used in California real estate transfers. If a problem should arise with the property, such as the buyer, or grantee, discovering there's a lien on the property, the warranty deed gives the grantee the right to sue the grantor.

California uses the term "grant deeds" instead of warranty deeds. Because grant deeds vary in format from county to county, make sure you get a grant deed used by the county where you are filing, which should be the county where the property is located.

The cost of a California quitclaim deed

As in other states, a quitclaim deed in California comes with filing costs, which vary by county. As of 2018, for example, the costs in Los Angeles County include a base fee of $15 and additional fees of approximately $87. Additional pages filed are $3 each. The cost is reasonable compared to fees in other states.

Quitclaim deed tax implications in California

Like other deeds, quitclaim deeds require payment of all back taxes before the grantee can receive the property. If no money changes hands between the grantor and the grantee, a gift tax applies and you must file a United States Gift (and Generation-Skipping Transfer) Tax Return (Form 709). There is no gift tax when a spouse transfers the deed to the other spouse or when the deed is placed into a trust. There is a documentary tax in California, but there's an exemption if the transfer was the result of the grantor's death.

There are many exemptions to real property transfer taxes, but they have to appear on the quitclaim deed for you to qualify for the exemption. You may want to discuss your real estate transfer with your tax adviser. Otherwise, you could be stuck with capital gains taxes if you try to sell the property at a later date. It's also possible to miss some exemptions.

How a quitclaim deed affects a mortgage

A common question is whether a quitclaim deed removes the grantor's name from the mortgage. The rule is that the mortgage does not follow the quitclaim deed. Thus, if you have a mortgage and you transfer your property by quitclaim deed to someone else, you're still responsible for paying the mortgage. This doesn't mean the grantee can't assume the mortgage or refinance, but the grantor and the grantee must work together to resolve this issue. Otherwise, if you're the grantor, you're still responsible for the debt on your mortgage.

California quitclaim deed FAQs

What's the difference between a quitclaim deed and a grant deed in California?

A quitclaim deed transfers only whatever ownership interest you currently have in a property, while a grant deed guarantees you actually own the property and promises to defend against any problems with the title. Grant deeds are what most people use when buying and selling homes because they offer protection. Quitclaim deeds are mainly used between family members, in divorces, or when adding property to a trust where people already know and trust each other.

When should I use a quitclaim deed instead of other types of deeds?

You should use a quitclaim deed when you're transferring property to someone you trust and don't need ownership guarantees. The most common situations include giving property to your children or other family members, transferring a home to your ex-spouse after a divorce, putting your house into a living trust, or fixing small errors in property titles. Avoid using a quitclaim deed when buying property from strangers because you won't have any protection if there are hidden problems with the ownership.

What information must be included in a California quitclaim deed?

A valid California quitclaim deed must include the grantor's and grantee's full names, the property's legal description (including Assessor Parcel Number), language stating you're "quitclaiming" the property, and a notarized signature. The legal description must match county records exactly.

Will I have to pay taxes when I use a quitclaim deed?

You might have to pay taxes depending on your situation, but there are several exemptions that could save you money. If you're transferring property between spouses, to a trust, or as an inheritance, you typically won't owe California's documentary transfer tax. However, if you're giving property as a gift (like parents giving a house to their child), you might need to file federal gift tax forms, though most people won't actually owe any gift tax due to lifetime exemptions. The person receiving the property becomes responsible for future property taxes. Since tax rules can be complicated and change frequently, it's smart to talk with a tax professional before completing your transfer to understand exactly what you might owe.

What happens to the mortgage when I sign a quitclaim deed?

The mortgage stays with you even after you sign a quitclaim deed—transferring the property title doesn't transfer the loan responsibility. This means you're still legally required to make the mortgage payments even though you no longer own the property. For example, if you're getting divorced and quitclaim the house to your ex-spouse, the mortgage company can still come after you for payments if your ex-spouse doesn't pay.

What risks should I know about before accepting property through a quitclaim deed?

The biggest risk is that you could receive property with serious problems that you can't do anything about later. Since quitclaim deeds don't include any guarantees, you might discover the property has unpaid taxes, liens from contractors, boundary disputes with neighbors, or even that the person who gave it to you didn't actually own it completely. Unlike other types of deeds, you can't sue the person who gave you the property if these problems come up later.