Quitclaim Deed: What It Does, Due-on-Sale, Tax and 15 States

What a quitclaim deed does, in the statutes’ own words

The top results for “quitclaim deed” are form sites that sell a template. What the state statutes that prescribe the form actually say is short, and it is the same in every state we read: the deed passes the signer’s interest, whatever it is.

• Ohio prints the effect of its statutory form in section 5302.11: a deed in that form “has the force and effect of a deed in fee simple to the grantee” but “without covenants of any kind on the part of the grantor.”
• Washington (RCW 64.04.050): a quitclaim deed in the statutory form conveys “all the then existing legal and equitable rights of the grantor in the premises” and “shall not extend to the after acquired title unless words are added expressing such intention.”
• Arizona (Arizona Revised Statutes 33-402) gives the whole form in one line: “For the consideration of ______________, I hereby quit claim to A.B. all my interest in the following real property (describing it).”
• New York (Real Property Law section 258, Schedule G, Statutory Form D) uses the words “does hereby remise, release, and quitclaim.”

Three things follow from the text (our reading). The grantee gets no warranty from the grantor, so a defect in title is the grantee’s problem. A quitclaim does not prove the grantor owned anything; if the signer had no interest, the grantee received none. And nothing in these forms touches a mortgage: the deed moves title, and the loan stays a contract between the lender and the person who signed the note.

Warranty deeds work the other way. Texas prints its statutory form as one “with a covenant of general warranty” (Texas Property Code section 5.022(a)), and then says in section 5.022(b) that “A covenant of warranty is not required in a conveyance.” Warranty, special warranty and quitclaim deeds differ in what the grantor promises, not in whether the deed transfers the title the grantor actually has (our reading).

The mortgage: what the Garn-St Germain Act protects, word for word

Most mortgage contracts contain a due-on-sale clause, and a quitclaim deed is a transfer. Federal law decides whether the lender can act on it. Section 1701j-3(b)(1) of Title 12 lets a lender “enter into or enforce a contract containing a due-on-sale clause” notwithstanding state law, and subsection (b)(2) says the exercise of that option “shall be exclusively governed by the terms of the loan contract” except as subsection (d) provides. Subsection (d) is the exception list. It applies “With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units” (including cooperative stock and manufactured homes), and it says a lender “may not exercise its option pursuant to a due-on-sale clause upon” nine things:

Read what the list does not say. A transfer to a sibling, a parent, a friend or a business partner is not on it. A transfer to an LLC is not on it. Item (6) is worded “become an owner”, which fits a deed that adds a spouse or child as a co-owner as well as one that hands over the whole house (our reading).

The regulation narrows it. The implementing rule, 12 CFR 191.5(b), begins “With respect to any loan on the security of a home occupied or to be occupied by the borrower” and then says a lender shall not exercise its option on “A transfer, in which the transferee is a person who occupies or will occupy the property” that is a transfer to a relative resulting from the borrower’s death, a transfer where the spouse or child(ren) become an owner, or a transfer under a divorce decree or settlement. Its trust rule, paragraph (b)(1)(vi), covers a transfer into an inter vivos trust in which the borrower “is and remains the beneficiary and occupant of the property”, unless the borrower refuses to give the lender reasonable means of getting timely notice of a later transfer of the beneficial interest or a change in occupancy. And paragraph (b)(5) says nothing in (b)(1) restricts enforcement “upon the subsequent occurrence of any event which disqualifies a transfer for a previously-applicable exception” (our reading: a child who gets the deed and then moves out, or a trust that stops being the borrower’s home trust, can lose the protection).

Put together, the text protects a borrower who quitclaims an owner-occupied home to a spouse or child who lives in it, or into a revocable trust the borrower lives under (our reading). It says nothing that protects a deed of a rented-out house to an adult child who lives elsewhere, although the statute’s scope is “less than five dwelling units” and not “owner-occupied”; the gap between the statute and the regulation is one a servicer or a court may read either way (our reading). The statute does not forgive the loan or release anyone from it: a due-on-sale clause is the lender’s option, and without a call the borrower still owes the note.

Moving a mortgaged property to an LLC

Landlords ask this one most. The statute’s answer is silence. An LLC is not one of the nine items, and the occupancy test in 12 CFR 191.5(b) is not one an entity can meet, so a transfer to an LLC is governed by “the terms of the loan contract” under subsection (b)(2) (our reading). Whether the lender calls the loan depends on the due-on-sale clause in your note and deed of trust and on the lender’s policy. We read the loan-side details, including Fannie Mae’s servicer rules, in our DSCR loan in an LLC guide, and the liability and asset-protection side in LLC for rental property.

The deed side of an LLC transfer has its own statutes:

• Florida taxes a deed to an entity by the same documentary stamp rule as any other: 70 cents per $100 of consideration, where “consideration includes, but is not limited to, the money paid or agreed to be paid; the discharge of an obligation; and the amount of any mortgage, purchase money mortgage lien, or other encumbrance, whether or not the underlying indebtedness is assumed” (Florida Statutes section 201.02(1)(a)). A “conduit entity” rule in section 201.02(1)(b) then taxes a later transfer for consideration of an interest in an entity that received real property from an owner without full consideration, if it happens within 3 years.
• Arizona exempts a deed “From a member to its limited liability company or from a limited liability company to a member” for no or nominal consideration from the affidavit of property value (Arizona Revised Statutes 11-1134(B)(7)(c)).
• New York exempts “Conveyances to effectuate a mere change of identity or form of ownership or organization where there is no change in beneficial ownership” (Tax Law 1405(b)(6)).
• Washington counts the transfer of “a controlling interest in any entity with an interest in real property” within 36 months for valuable consideration as a sale for excise tax (RCW 82.45.010(2)(a)).

Gift tax and basis: what the child gets is the donor’s basis

A quitclaim to a child for nothing is a gift for federal tax. Section 2512(b) of Title 26 says that where property is transferred “for less than an adequate and full consideration in money or money's worth, then the amount by which the value of the property exceeded the value of the consideration shall be deemed a gift.” The consequences are a return, a basis and a use of lifetime exemption, and none of them is tax by itself.

Annual exclusion and the return. Rev. Proc. 2025-32, section 4.42, sets 2026: “the first $19,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts”; for a spouse who is not a U.S. citizen the figure is $194,000. The statute is 26 U.S.C. 2503(b). The return, Form 709, is due “not later than April 15, of the year after the gift was made” (Instructions for Form 709, 2025). Our annual gift tax exclusion guide goes through who must file and the IRS data. A gift to a spouse who is a citizen gets a deduction equal to the value of the interest (26 U.S.C. 2523(a)), which is why a house deeded between such spouses rarely produces gift tax, though terminable interests are carved out in 2523(b). The basic exclusion amount is $15,000,000 for 2026 (Rev. Proc. 2025-32, section 2.14), so a gift of a single house normally uses exemption and owes no tax (our reading).

Basis. Section 1015(a) says the basis of a gift “shall be the same as it would be in the hands of the donor”, with a loss rule: if that basis is higher than value at the date of the gift, the basis for determining loss is the lower value. The Form 709 instructions ask for it: “Show the basis you would use for income tax purposes if the gift were sold or exchanged.” If gift tax was actually paid, section 1015(d)(1) increases the basis by the gift tax paid with respect to the gift, but not above fair market value, and for gifts after 1976 only in the ratio of the gift’s net appreciation to its value (section 1015(d)(6)(A)). Property acquired from a decedent is different: section 1014(a) sets the basis at the value at the date of death, and our step-up in basis guide covers that rule and its exceptions.

The first row is arithmetic: $400,000 minus $120,000 is $280,000, and $400,000 minus the $19,000 exclusion is $381,000 (our arithmetic; federal income tax rates, the home-sale exclusion in section 121 and selling costs are ignored). Adding a child to a deed as a co-owner is a gift of the share, not of the whole house, and a fractional interest is reported with any valuation discount explained on the return (Instructions for Form 709, Schedule A). Whether a deed now or an inheritance later is cheaper in tax depends on the facts and on how long the owner lives, which is the question a CPA answers with the owner’s numbers.

Medicaid: a deed is a transfer of an asset

State Medicaid plans must follow 42 U.S.C. 1396p(c). If an institutionalized person or spouse “disposes of assets for less than fair market value on or after the look-back date”, the person is ineligible for nursing facility and similar services for a period the statute sets. The look-back date is “36 months (or, in the case of payments from a trust or portions of a trust that are treated as assets disposed of by the individual pursuant to paragraph (3)(A)(iii) or (3)(B)(ii) of subsection (d) or in the case of any other disposal of assets made on or after February 8, 2006, 60 months) before the date specified in clause (ii).” Clause (ii)(I) fixes the end of that window at the first date the person is both institutionalized and has applied for medical assistance (42 U.S.C. 1396p(c)(1)(B)).

Section 1396p(c)(2)(A) lists the home transfers that are not penalized. The assets transferred were a home and title went to:

• “the spouse of such individual”;
• a child who is under age 21, or blind or disabled;
• “a sibling of such individual who has an equity interest in such home and who was residing in such individual's home for a period of at least one year immediately before the date the individual becomes an institutionalized individual”;
• “a son or daughter of such individual” who lived in the home “for a period of at least two years immediately before the date the individual becomes an institutionalized individual” and, as the state determines, provided care that let the parent stay at home.

Two more points matter for a deed. Subsection (c)(3) says an asset held in a joint tenancy, tenancy in common or similar arrangement is considered transferred “when any action is taken, either by such individual or by any other person, that reduces or eliminates such individual's ownership or control of such asset”, so adding a child to a deed can start the clock (our reading). And a person is not ineligible to the extent that “all assets transferred for less than fair market value have been returned to the individual” (1396p(c)(2)(C)). State plans add their own rules and estate recovery; read your state Medicaid agency’s material, and take it to an elder-law attorney before the deed, not after.

Title insurance: what the ALTA owner’s policy says after a transfer

Your owner’s policy insures you, not whoever you convey to. We read the American Land Title Association’s Owner’s Policy form (2021 v. 01.00, effective July 1, 2021), the template many insurers adapt; a specific policy may differ (our reading).

• Who is an “Insured”. Besides the person named in Schedule A, the definition in Condition 1.g includes heirs and devisees and “the grantee of an Insured under a deed or other instrument transferring the Title, if the grantee is” an Affiliate; a trustee or beneficiary of a trust created by a written instrument established for estate planning purposes by an Insured; a spouse who receives the Title because of a dissolution of marriage; a transferee by a transfer effective on the death of an Insured as authorized by law; or another Insured named in Item 1 of Schedule A. An “Affiliate” is an Entity “that is wholly owned by the Insured”, and “Entity” includes a limited liability company.
• After a conveyance. Condition 2 says the policy continues for as long as the Insured “retains an estate or interest in the Land”, holds a purchase money mortgage given by a purchaser, or has liability for warranties, and that it “does not continue in force or effect in favor of any person or entity that is not the Insured and acquires the Title.”

Read together (our reading): a quitclaim into your wholly owned LLC or into your own estate-planning trust falls inside the definition; a quitclaim to a child, a sibling or a spouse outside a divorce does not, so that grantee is not covered by your policy. Exclusion 3.a also removes from coverage any defect “created, suffered, assumed, or agreed to by the Insured Claimant”. Whether an insurer wants notice or an endorsement before the deed is a question for the insurer and the attorney handling it.

Transfer taxes, short forms and signing in the 15 largest states and the District of Columbia

We picked the 15 states with the largest apportionment population in the 2020 Census (U.S. Census Bureau, Table 1): California with 39,576,757, then Texas, Florida, New York, Pennsylvania, Illinois, Ohio, Georgia, North Carolina, Michigan, New Jersey, Virginia, Washington, Arizona and Massachusetts with 7,033,469 at number 15, plus the District of Columbia. Each cell below comes from the statute or code on the state’s own legislature or code site, read on October 13, 2026. “Not verified” means we could not read the official text from our network or did not find the section; it is not a statement that the state has no such rule. North Carolina, Michigan, New Jersey and Massachusetts are not verified in any column because their official sites blocked or did not answer our requests.

Statutory short form and who must sign

Transfer or recording tax on a gift or a deed for no consideration

Three readings from the two tables. First, the exemptions turn on consideration, not on the word “quitclaim”: a deed with a mortgage behind it can carry a tax base in Florida and New York, whose statutes count a mortgage as consideration even when the debt is not assumed, which is the reverse of the “free transfer” most form-site pages promise (our reading of Florida Statutes 201.02(1)(a) and Tax Law 1401(d)). Second, family exemptions are narrow: Ohio’s covers spouses, parents and children, not siblings; Pennsylvania’s reaches siblings but claws back a quick resale. Third, an exemption from tax is not an exemption from the paperwork: Arizona requires the exemption to be noted on the face of the instrument (11-1134(C)), and Virginia requires the deed to say it is a gift or a quitclaim without consideration.

California: Proposition 19 and the child’s property tax

California’s property tax rests on the base-year value set at the last change in ownership, and a deed to a child is a change in ownership unless an exclusion applies (our reading). Revenue and Taxation Code section 63.2, the Proposition 19 provision, applies “beginning on and after February 16, 2021” and excludes a transfer “between parents and their children” only if these conditions hold (section 63.2(a)(1)):

• the property is “the principal residence of an eligible transferor”, or a family farm under paragraph (2);
• the transfer “is required to be of a principal residence of the transferor, and become the principal residence of the transferee within one year of the transfer” (63.2(a)(1)(A));
• the transferee files for the homeowners’ or disabled veterans’ exemption within a year of the transfer (63.2(a)(1)(B)), and a claim for the exclusion is filed with the assessor (63.2(b)), within three years after the transfer or before a transfer to a third party, whichever is earlier (63.2(f)(1)(A)).

Paragraph (e)(8) says “Real property does not include any interest in a legal entity”, so a transfer of LLC units is outside the exclusion. A rental house, a second home or a parent’s house the child will not live in is not the parent’s principal residence and the child’s principal residence, and the text of section 63.2 gives it no exclusion (our reading).

Even when it applies, the exclusion is capped by value. Under 63.2(d), the new taxable value is the old taxable value plus an amount that is “zero dollars ($0)” if the fair market value at transfer is less than the old taxable value plus one million dollars, and otherwise is the fair market value minus that sum. Our example: a home with a $150,000 taxable value and a $1,250,000 value at transfer gives a new taxable value of $150,000 plus ($1,250,000 minus $1,150,000), or $250,000; at $1,100,000 it stays at $150,000 (our arithmetic on the text of section 63.2(d)). The exclusion needs a filed claim, so the deed itself starts a filing duty. Exclusions for transfers between spouses and other California rules are in sections we did not read (not verified).

Alternatives that avoid the quitclaim question

A quitclaim deed that takes effect now is the strongest and least flexible way to move title: it is a completed gift, it can start the Medicaid clock, it carries the donor’s basis, and the grantor loses control (our reading of the sections above). Our pages on transfer on death deeds by state, California and Texas cover the version that takes effect only at death, and the Florida Lady Bird deed covers a Florida form of the same idea. A deed into a revocable living trust is the item (8) case in the Garn-St Germain list above. Which of these fits depends on state law and on the loan.

Who should do this, and what to ask

A quitclaim deed looks like a one-page form, and the cost of a mistake is large: a lender’s call, a transfer-tax claim, a lost step-up, a Medicaid penalty period or a reassessment. A real-estate attorney licensed in the state where the property sits should draft or review the deed and the recording documents, and a CPA or tax attorney should model the gift and the basis. A financial-adviser match does not replace either of them, so we do not put one on this page. The decision points the documents above turn on:

• Is there a mortgage? What the due-on-sale clause says, who services the loan, and whether the transferee is a spouse or child who will live in the home (12 U.S.C. 1701j-3(d)(6); 12 CFR 191.5(b)).
• Who receives it? A spouse, a child, a trust and an LLC are four different answers on the mortgage, the title policy and the tax.
• Is it a gift? Then Form 709 may be due and the donee takes the donor’s basis; the alternative is a bequest, which resets it (26 U.S.C. 1015(a), 1014(a)).
• Will the owner need long-term care within five years? The 60-month look-back and the home exceptions in 42 U.S.C. 1396p(c)(2)(A) decide whether a deed hurts.
• What does the state tax and require on the deed? The two tables above start the question; the county recorder’s checklist finishes it.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on October 13, 2026: 12 U.S.C. 1701j-3, 26 U.S.C. 1014, 1015, 2503, 2512 and 2523, and 42 U.S.C. 1396p, United States Code 2024 edition (govinfo.gov); 12 CFR 191.5 (eCFR, current to October 1, 2026); IRS Rev. Proc. 2025-32 and the 2025 Instructions for Form 709 (irs.gov); the ALTA Owner’s Policy 2021 v. 01.00 (American Land Title Association); California Revenue and Taxation Code 63.2, 11911 and 11930, Civil Code 1091 and 1092 and Government Code 27287 (leginfo.legislature.ca.gov); Texas Property Code chapters 5 and 12 (statutes.capitol.texas.gov); Florida Statutes 201.02, 689.01, 689.025 and 695.03 (leg.state.fl.us); New York Real Property Law 258 and 291 and Tax Law 1401 and 1405 (nysenate.gov); Pennsylvania Code title 61, section 91.193 (pacodeandbulletin.gov); Ohio Revised Code 319.54, 5301.01 and 5302.11 and 35 ILCS 200/31-45 and 765 ILCS 5/20, read from Internet Archive captures of the official pages because the live sites did not answer from our network; Georgia House Bill 1516 (2026 session, legis.ga.gov); Code of Virginia 55.1-363, 55.1-600, 55.1-612 and 58.1-811 (law.lis.virginia.gov); Revised Code of Washington 64.04.020, 64.04.050 and 82.45.010 (app.leg.wa.gov); Arizona Revised Statutes 11-1134, 33-401 and 33-402 (azleg.gov); Code of the District of Columbia 42-1102 and 47-902 (code.dccouncil.gov); U.S. Census Bureau, 2020 Census apportionment population, Table 1. The official sites of North Carolina, Michigan, New Jersey and Massachusetts could not be read, and those cells are marked not verified. This is analysis of public documents, not investment, legal or tax advice.