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Quit Claim Deed, Warranty Deed and Lady Bird Deed - What Do I Need?

When a person owns real estate, using a deed to deal with that ownership upon death is often a part of the estate planning process. Selecting the proper type and format of that deed requires an examination of several factors. Using the wrong type of deed can completely derail an estate plan, and result in an outcome that was not anticipated. Working with an experienced attorney can help ensure that any deeds signed as part of the estate planning process actually accomplish your goals and objectives.

Let's begin with a bit of background - Deeds generally transfer ownership of real estate from the current owner (generally called a Grantor) to another owner (generally called the Grantee). Deeds also contain the legal description of the real property, and, in Michigan, must be recorded to give third parties notice of their existence.

What is a Quit Claim Deed?

A Quit claim deed is a deed that transfers whatever interest in real property that the Grantor owns to the Grantee. Quit claim deeds do not come with any sort of warranty of title, or any warranty that the Grantor actually owns any interest in the real estate being transferred. Quit claim deeds are sometimes used to transfer ownership of property between related parties (i.e. from an individual to that individual's trust or LLC or from one family member to another). Quit claim deeds signed between unrelated parties are risky, however, because they only transfer the interest in the property owned by the Grantor, and there's no way to ensure clear title to the property is transferred.

What is a Warranty Deed?

Just like a quit claim deed, a warranty deed transfers whatever interest in real estate that the Grantor owns to the Grantee. However, by including the warranty language, the Grantor guarantees that the Grantor is passing clear title to the Grantee, and that the Grantor has the legal right to transfer the property to the Grantee. Warranty deeds are the most commonly used form of deed for transfers between unrelated parties. Warranty deeds are preferred (if not mandated) whenever a title company is involved in the transaction, because a warranty deed gives the Grantee (or the title insurance company) the right to go after the Grantor if a title defect is discovered down the line. When recording a warranty deed, it is also necessary to present the deed to the local treasurer to obtain a certification that all taxes assessed against the property are paid before the deed can be recorded.

Is a Lady Bird Deed and Quit Claim Deed or a Warranty Deed?

A Lady Bird Deed could be either a warranty deed or a quit claim deed - it just depends on whether the deed contains warranty language or not. Lady Bird Deeds can be very powerful estate planning tools (more information HERE), but the vast majority are either quit claim deeds or warranty deeds at their core.

Use of Deeds to create Joint Ownership

Either a warranty deed or quit claim deed can be used to create a joint ownership arrangement. There are different forms of joint ownership in Michigan, and each have different implications on the relationship of the joint owners. Working with an attorney who understands the different forms of ownership can save a great deal of frustration in the long run. Many times, people intend to create one form of joint ownership in a self-prepared deed, but include language (or fail to include language) to ensure that this intent is captured. For instance, many people include a child as a joint owner for purposes of avoiding probate and planning for a smooth transition of ownership, but fail to include language in their deed that passes complete ownership to the survivor, making it necessary to probate a deceased owner's interest.

At Lumbertown Law, we are familiar with the different forms of deeds that should be used in the estate planning process, and we work with clients to ensure that the client knows the pros and cons of each form of deed (and joint ownership) before signing the deed. If you have questions about how to deed your property to accomplish your estate planning goals, contact us today to schedule a consultation.


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