A deed is a written document that records the transfer of real estate between individuals. As such, the drafting of a proper and valid deed is an indispensable part of any well planned and executed real estate transaction. While a deed need not take any particular form to convey land in Texas, to be effective it must or should meet certain legal requirements, including:
- Be in writing;
- Name the grantor and grantee (the buyer and seller’s identities must be ascertainable from the instrument);
- Contain language of conveyance (i.e., words showing the grantor/seller’s intent to convey title to the land); and
- Be duly executed by the grantor/seller (i.e., the person transferring title).
Additionally, delivery of the deed and acceptance are required to effect a transfer of title to land. It is also important that you record your deed and that it comply with state and federal laws. Recording your deed tells the world at large that you have title or an interest in the real property. That is, it says, “I own this property,” or “this property is collateral for a loan,” or “I have a claim or lien against this property.” For more information on Recording your deed, see below, Recording Your Deed.
Other state’s laws differ regarding the language and format for deeds. Nonetheless, deeds usually take one of three forms:
- Quit Claim Deed – This type of Deed does not convey title to the property itself, rather it merely conveys whatever title or interest the grantor has in the property. If the grantor has nothing to convery, you get nothing. That is, the grantor makes no promise as to whether you are getting good title or unencumbered title or whether there is a lien on the property or whether someone else has superior title. There assurances are accomplished by General and Special Warranty Deeds.
- General Warranty Deed – A General Warranty Deed essentially protects a buyer against any title defects created by the seller or a prior titleholder. It requires a grantor to defend against title defects. Moreover, unlike the Quit Claim Deed, a General Warranty Deed contains a few promises or warranties. First, the seller/grantor is promising that he or she has not conveyed the same estate or any right, title, or interest in the property to any person other than the buyer/grantee, prior to executing the conveyance. Secondly, the seller/grantor is warrantying that property is free from encumbrances, at the time of the execution of the conveyance. A such, a general warranty deed obligates the seller/grantor indemnify (promise to compensate) the buyer/grantee for any losses cause by a claim against the title actually conveyed. Covered claims usually include those for an ownership interest or a lien or some other encumbrance, regardless as to when the claim arose.
- Special Warranty Deed – A Special Warranty Deed is similar to a General Warranty Deed except that it only protects the buyer against those claims created by the seller (i.e., “the claims of persons deriving their interest in the property through the grantor”). In other words, if the General Warranty Deed promises to defend the buyer against all comers, the Special Warranty Deed only applies to encumbrances or clouds on title that were created by the grantor. If the seller created the cloud on title or encumbrance, then the warranty has been breached, and the seller must defend and indemnify the buyer. On the other hand, a Special Warranty does not protect buyers against claims by individuals in the grantor’s chain of title or so-called “strangers to title.” If the claim, encumbrance or cloud to title arises out of these individuals or their acts, then the seller is probably not obligate to indemnify you for losses cause by such claims.
Recording your Deed.
As mentioned above, recording your deed is very important. While recording the deed is not necessary to pass title, it usually is required to provide notice to third parties. This is important because failing to properly record a deed can significantly limit your legal remedies. The purpose of recording a deed is to tell the world at large that you have some title or a lien or some other interest in real property. If you fail to record your deed, potential buyers and the world at large can plead ignorance as to your claim of ownership, your lien or other interest in the property. That is, if someone buys a property in good faith for value and you haven’t recorded a deed related to the property, you may have little or no recourse against that good faith purchaser. They may, in a sense, actually acquire superior title, free from your claims of ownership, title, or some other interest in the property. You may even lose liens that would have properly attached to the property and the right to foreclosure.
We can assist with the legal basics involved in any issue of title and deeds. Although these are in some cases relatively simple, it is of utmost importance they be reviewed and addressed correctly, as one small mistake can have a tremendous legal impact.
Contact us today to schedule a consultation (210) 479-3195.