Q: My wife and I were given a house by a friend using a quit claim deed. Will we have any problems if we decide to sell this house?
A: You shouldn’t have any problems selling the home, assuming you received good title to the home from your friend.
A quit claim deed is as good as any other deed in conveying title from one person to another. The only real difference between the deeds is in a quit claim deed the former owner transfers whatever ownership and interest in the land that he or she owns. If that owner owns a 50 percent interest, he or she only transfers 50 percent interest. And with a quit claim deed, you can’t go back to the seller and claim he represented anything with respect to the transfer of the land.
With a warranty deed you, as the new owner of the land, could sue the former owner if he were to transfer to you title to the home and that title turned out to be “bad.” A warranty deed by its own terms tells the future owner that the title to the home is being transferred to the new owner in a certain condition and if that representation turns out to be false, the new owner has a claim against the old owner.
In your case, your quit claim deed allows you to step into your friend’s shoes, and you are free to own or sell the home in the same manner as your friend could have owned or sold it.
One last item to keep in mind: Since you received the home as a gift, when you sell the home, you will need to determine what the home’s value is to you — the tax basis of the home. Your tax basis will be whatever your seller’s tax basis was.
If your seller bought the home for $50,000 and installed a new roof, replaced the windows and put on new siding at a cost of $10,000, your cost basis for the home would be the same as his, $60,000.
Jan. 14, 2008.