People frequently prepare deeds of real estate without advice. Many people seem to think that a quit claim deed can be created by anybody and will resolve anything. A quit claim deed is just a type of deed. It does not avoid the requirements of creating a valid deed. Title insurers like to see warranty deeds in the chain of title. A quit claim deed actually means ‘I don’t know if I own this, but I give it up.’
Various requirements regarding the listing of the grantor and grantee may seem silly and unimportant, but many significant errors occur in the naming. For example, if you intend that if one grantee dies, the property passes automatically to another owner, certain words are required.
Another common problem is using the legal description from the tax rolls instead of from a deed. The tax office’s data is good information, but it is not intended to be an official record. The tax office may use shortcuts to describe the property, which omits important information.
In addition to these technical issues, there may be tax and other important matters. Transferring a property that has a mortgage requires payment of documentary stamp tax on the mortgage balance. The Department of Revenue monitors such transactions.
Often people transfer properties to avoid probate on death. If one gives away an interest in property while alive, the grantee receives the grantor’s tax basis. On the other hand, if property passes at death, the tax basis is stepped up to date of death value.
If there is any chance the owner might need nursing home care within the next five years, adding a name to the title may disqualify the owner. Although one’s home is an exempt asset, transferring an interest negates the exemption.
Adding a name to title is irrevocable. To remove the name, or to sell or mortgage the property, the signature of the other owner is required.
Thus, there is much to consider before creating a deed without proper advice.
Attorney Michael A. Pyle, of Pyle, Dellinger & Duz, PLLC, 1655 North Clyde Morris Blvd., Suite 1, Daytona Beach, Florida, 32117 Telephone: 386. 615.9007. E-mail: mikep@pylelegal .com or website: www.pylelegal.com