Signing A Quitclaim Deed Warning

signing

Before signing a quitclaim deed, understand the potential damaging consequences.  

First understand that deeds and mortgages are completely different and work independent of each other.

  • A deed is a legal instrument which is used to transfer interest in real property.
  • A mortgage is a debt instrument, secured by the collateral of specified property, that the borrower is obliged to pay back.
If you are on a deed and mortgage with another individual and are asked to sign a quitclaim deed (such as happens in a divorce), be cautious and here’s why:
  • When you sign over the interest (by signing a quitclaim deed) you are not freed from the mortgage obligation. Only by having the other person refinance the property into their name, will you be released from the mortgage obligation. 
  • If you sign a quitclaim deed, the other person on the mortgage has the right and ability to restructure the loan without your approval. Once you are off of the deed (and not the mortgage), the other individual is able to modify the terms of the loan (i.e. extend the length of the loan). Most people do not know this can happen and find out the hard way that it can and does. Doing a quick Google search will produce articles like these:

Before signing a quitclaim deed understand the rights you are giving up. Understand that the deed and mortgage are two different things and that if you are on a mortgage, you will still be on the mortgage after signing a quitclaim deed. Know that the other individual on the mortgage can modify the terms extending the length of the loan. Realize that if the mortgage defaults, your credit will be negatively impacted.

Depending on your situation you may want to seek legal counsel before signing a quitclaim deed.