The No. 1 Quitclaim Deed Mistake and How to Fix it

If how title to the property will be transferred has not been designated, then Illinois law determines how title will be transferred.

As you must already know, you need a written document to transfer title in real property from one person or entity to another. A quitclaim deed is simply one of the documents that can be used to do this. As opposed to general and special warranty deeds, which are other ways this can be done, quitclaim deeds do not contain any warranties of title. A quitclaim deed only conveys whatever interest the seller may have in the property to the buyer.  The seller may have an ownership interest or he/she may not or he/she could be mistaken about what their ownership interest is, but whatever the ownership interest is, that is what is being given to the grantee.

As such, a quitclaim deed tends to be less nuanced, and does not cover the finer points like general or special warranty deals.  Quitclaim deeds are often used in cases where a property transfers hands from one family member to another, or between people who know one another, and when the risk of defects in title is low.  And finally, they are also effective when you want to transfer ownership of a property without selling it, meaning when there’s no exchange of money.

The No. 1 Mistake Made with Quitclaim Deeds?

The No. 1 reason is a failure to designate the manner in which the parties will take title. It’s a common mistake when people get a stock quitclaim deed;  So it’s important to make this as clear as possible at the outset.

When two or more people are granted real estate in Illinois, they are presumed to own as tenants in common, unless a joint tenancy with rights of survivorship, is specifically created. In the case of a husband and wife, when both of their names are on the deed, tenants by the entirety is created by default. The following types of ownership are recognized in Illinois: joint tenancy, tenancy in common, and tenancy by the entirety.

Tenants in Common

In general, tenancy refers to when two or more people have ownership in a property, with each owner having the right to leave their share of the property to whomsoever they wish upon their death. While no one title-holder can claim ownership to a particular part of the physical property, it is possible for them to have different ownership interests, so one party could own 30% of the property and another 20%. Plus, all of the parties don’t have to get an ownership interest at the same time; it’s possible for one person to get an ownership interest years after the other parties got theirs. 

Now, when one of the title-holders to a tenants in common deed dies, his/her ownership of the property will not automatically transfer to the other title-holders. The transfer of ownership will be based on what has been stated in the deed and if nothing is stated, then the default under Illinois law is as tenants in common. This means that the ownership interest that the deceased title-holder owned will go to their heirs and not to the other title-holders. This is typically not what people want to happen.  People typically want the deceased title-holder’s ownership interest to transfer to the others on title – so that the last one living has a 100% ownership interest in the property.  But this is the no. 1 mistake people when dealing with stock quitclaim deeds – they fail to designate how the parties will take title which causes the default of tenants in common to kick in. 

Joint Tenants with a Right of Survivorship

Joint tenancy with right of survivorship is usually the go-to option for most people, including family members and business partners. Joint tenants have equal shares of the property, and after death, the ownership share of the deceased party passes on to the remaining title-holders. In states where joint tenancy is the norm, this transfer of ownership is automatic, and the remaining title-holders don’t have to do anything. The deceased owner’s property cannot be transferred by their legal heirs. [AM1] The survivorship afforded by this type of title ownership helps prevent a lengthy probate process.  

Tenants by Entirety

Tenancy by entirety is a type of title ownership reserved for married couples. If one of the spouses wishes to modify their interest in the property then both spouses will have to give their consent. In the event of the death of one spouse, the surviving spouse gets full ownership of the property.

In Conclusion

Avoid the No. 1 mistake made in quitclaim deeds by designating how the parties will take title.  You can use our FREE Illinois Lawyer Approved quitclaim deed with instructions  to make sure you aren’t making a costly mistake. You can download the FREE quitclaim deed here.  Otherwise, you may think you own the property outright, only to find out that you only own 50%, and the deceased title-holder’s wife/husband owns the other 50%! The scenario could further deteriorate if the deceased title-holder had kids, now the spouse owns 25% and the 2 grown kids each own 12.5%.   Don’t let your investment turn into a nightmare, be sure to designate how the parties will take title, even in a quitclaim deed.

For informational purposes only, not intended to be legal advice. For legal advice consult a lawyer.