Table of Contents:
Disclaimer: We are NOT lawyers; we recommend consulting with a lawyer for any advice specific to your situation or before making any big decisions.
In post 2.2.3 (step 10), we gave a high-level overview of how to transfer your property to an LLC using a Quit Claim Deed - if you haven’t read post 2.2.3 start there. This step is only needed if the LLC doesn’t already own your property (i.e., you didn’t buy the property with an LLC) and this is the final step to setting up your business! In this post, we’ll cover what a quitclaim deed is, when you should or shouldn't use it, and the steps to file a quitclaim deed.
When Should I Use a Quitclaim Deed?
As we mentioned in post 2.2.2 a large benefit to having an LLC is Personal Liability Protection, which means that personal assets under your name (e.g., savings/investment accounts, property, cars, etc.) are protected. If unexpected renovations become necessary and you underestimate the financial burden, creditors can’t go after the owner’s personal assets - this only works if the LLC owns the property that you’re renting so this step is crucial.
A quitclaim deed is a legal document used to transfer ownership in property from one party (the grantor) to another (the grantee) without any warranties regarding the title's quality. It is commonly used for transfers between known entities, such as family members or business partners, and is ideal for quickly adding or changing ownership to an LLC.
Pros (& when to potentially use a quitclaim deed):
The process is straightforward and involves fewer legal formalities compared to other types of property deeds (i.e., warranty deeds)
Involve lower costs, as there is no need for a title search or title insurance
Often used for property transfers between family members, such as transferring a home to a spouse or children as there is a high level of trust
The grantor is not required to guarantee the condition of the property title, which simplifies the process when the property’s history is clear and uncontested
When to potentially use a Quitclaim deed:
Transferring purchase in personal name to business name where owners are the same
Transferring between trusted family members
Adding or removing a spouse from a title
Transferring into a family trust
Clearing up title issues (e.g., incorrect names)
Cons (and what to use instead):
Offers no warranties or guarantees about the title's quality, which means the grantee receives no protection against title defects or claims from third parties - if issues arise, the grantee has no legal recourse against the grantor
Common title defect examples:
Liens - legal claims against a property that must be paid off (e.g., unpaid mortgages, property taxes, contractor work, etc.)
Encumbrances - restrictions or claims against a property that can limit the owner's use or transferability of the property (e.g., easements, covenants, etc.)
Boundary Disputes - disagreements between property owners over property boundries, they can occur due to unclear or inaccurate property descriptions in earlier deeds or discrepancies between existing physical boundaries (like fences) and the legal property lines
Undiscovered Will - a previous owner may have willed the property to someone else, and this will was never discovered or properly recorded
Fraud and Forgery - if a previous sale or transfer was based on fraudulent documents or forged signatures
Claims by Missing Heirs - heirs of previous owners may appear long after a property transaction has taken place, claiming ownership rights based on inheritance laws
If any of these title defects surface after the property has been transferred via a quitclaim deed, the grantee has no legal basis to demand compensation or remedy from the grantor (previous owner), because the grantor did not guarantee the quality of the title when transferring the property
Increased risk of future disputes such as hidden liens or claims, these problems become the grantee’s issues after the transfer, which can lead to legal disputes and financial losses
Due to the lack of title protection, quitclaim deeds are generally unsuitable for standard real estate sales (e.g., commercial real estate or buying/selling through a realtor) since the buyer and seller typically do not know each other - hopefully this doesn’t impact you as you already own the property
Lenders may be hesitant to offer a mortgage due to the potential risks associated with unclear titles - hopefully this doesn’t impact you as you already own the property
Warranty Deed - Another Option
If you feel uncomfortable using a quitclaim deed you can use a warranty deed, in which the grantor is warranting or guaranteeing the title against any and all previous claims and conditions. Warranty deeds provide the strongest protection for the buyer because the grantor legally vows that they own the property outright, that the property is free from all liens and encumbrances (unless specifically listed in the deed), and that they have the legal right to sell it.
5 Steps to Complete a Quitclaim Deed
Step 1: Complete Prerequisites
Ensure you already have an LLC created - refer to post 2.2.3 to see the steps to create an LLC
Outline ownership structure (e.g., ownership percentages)
Find the following information:
Current deed
You can find this here on the County Recorder’s Office website
Legal description of the property, which typically includes lot number, subdivision name, and other details that identify the property's exact boundaries and location
You can find this information on your current deed, property tax bill, or at the county recorder’s office
Parcel ID Number (also known as Tax Assessor’s Number)
You can find this information on property tax bills or mortgage statements
Check with your local county clerk or recorder’s office for any specific forms or additional filing requirements, such as a preliminary change of ownership report that might be required in some jurisdictions.
You can find your county’s recording office here.
By having all this information ready, you can accurately complete the quitclaim deed, helping to ensure that the property transfer to your LLC is executed legally and effectively.
Step 2: Completing the Quitclaim Deed
Quitclaim deed forms are available online, at legal supply stores, or from a local attorney. Ensure the form complies with local and state laws where the property is located.
If you want to complete your quitclaim deed yourself:
Recommended: Use an online legal service to draft your quit claim deed (this is what we did)
We used LawDepot for our quit claim deed ($41) and was tailored to our state requirements
Follow the prompts to populate relevant information
Download, save, and print your quitclaim deed
Go to your property’s state legislative website (search for your state here)
Search for “quitclaim deed requirements,” “property transfer forms,” or “real estate deed regulations” to direct you to the relevant documents
Populate relevant forms in conjunction with your state’s requirements
If you don’t want to file your quitclaim deed yourself, you can:
Hire a real estate attorney, which is often the safest option as they can:
Ensure compliance with all local and state laws
Provide advice on potential legal issues and implications
Handle the preparation and filing, ensuring everything is executed correctly
Leverage a title company’s services, such as First American Title as they:
Are experienced in handling property title documents
Can help ensure that the deed is properly recorded
Offer a high-level of reliability and compliance
Are more affordable than hiring an attorney
Step 3: Notarize Document
If you’re using a real estate attorney or a title company, they should also help with filing so you shouldn't need to do this step, if you’re doing it yourself, you can notarize at:
Most banks offer this service for customers, we are Chase customers so we went to a branch and got our documents notarized for free
Online notaries such as Notarize ($25) where you can get documents notarized via video call
Certain UPS offices offer notarization ($10-$15), we recommend calling the UPS location as not all UPS employees can notarize documents
Step 4: Record the Deed
Submit the completed and notarized quitclaim deed to the county recorder or land registry office where the property is located. You can find your county recorder office here with instructions on where to file. Since information is often updated, double check the address and any requirements by going to the actual recorder office website.
We paid ~$205 to file ours with King county in Washington. You can find the cost to file yours online at your recorder office website.
Step 5: Confirm Transfer, Update Information, and Upload
Check the county records a few weeks after filing to ensure the quitclaim deed has been recorded and reflects the new ownership accurately. Make sure you update any existing rental agreements, insurance, etc. to reflect the new ownership.
Add your new deed to your Google Drive (or location where you store business documents) - see post 2.1 for recommended folder structure
Download Our Project Plan Tool
You’ve successfully set up your LLC and transferred your property to your LLC!!! Don’t forget to subscribe to get access to our project plan tool for free:
The project plan will help you stay organized and on track - the file contains detailed steps with duration estimates, resource links, and contextual information in a single location.
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