Transferring ownership of a property in California is accomplished via a property deed. There are at least a dozen different standard deeds, all developed over time to address different circumstances. These deeds vary from state to state. In California, the two most common types of property deeds are grant deeds and quitclaims.
PROPERTY DEEDS
A deed is a legal instrument that assigns ownership of a property to one or more individual or entities (such as a company, organization, foundation, municipality). Any dispute over who owns a property can be settled by examining the deed.
GRANT DEED
Grant deeds are legal instruments specific to California. Grant deeds are used in typical property sales where someone purchases property for a sum of money. Grant deeds not only convey a seller’s interest in a property to a buyer in perpetuity, but they also guarantee the new owner will not be held responsible for any unknown ownership claims that might be made against the property in the future. In grant deeds, the seller also promises to be liable for any future claims. This means that if a claim is made and the seller cannot verify that he had complete ownership of the property before he sold it, he will compensate buyer for any money the buyer spent on the property, including taxes, insurance, repairs and improvements.
QUITCLAIM DEEDS
Quitclaim deeds are used to transfer ownership of jointly owned property to just one of the owners. Unlike grant deeds, quitclaims make no guarantee against future ownership claims. Quitclaims simply state that a prior joint owner gives up all future rights, benefits and interests in the property named in the deed. Quitclaim deeds are NOT meant to be used to convey ownership from one person to an entirely new/different person.
This is just a very general review of how property ownership is conveyed and transferred in the state of California. Different circumstances call for different measures. For more technical and tax related questions, please contact the proper tax professional.
