What is a settlement deed?
A settlement deed is a legal document executed when two parties jointly own a property with a debt associated with it and one party needs to transfer ownership to the other party. These deeds often include a home and are used in divorce cases.
The deed removes all claims and liabilities from one party and transfers all those to the other party. The husband deeds over his rights and title to the wife, and he severs all claims to the property. This protects the property for the surviving owner from have any legal claims made against him. He also can't claim any rights to any profits from the subsequent sale of the home.
A settlement deed absolves the surviving party of concerns over unpaid or uncollectable debts. If creditors can't get relief from the first person, creditors can place liens or take other adverse actions against the surviving property. The settlement deed prevents this.
To quickly resolve this issue, the two parties execute a quitclaim deed. This tells the courts and future creditors that one person quit all claims to the property. This document works to prevent future claims by the person who "quits" the claim, but also prevents others from making claims against that property.