Deeds are legal documents used to convey or transfer title from one owner to another. Some of them offer promises about title from the seller to the buyer. In Texas, a variety of types of deeds are accepted, ranging from a general warranty deed, that includes a number of promises about title, to the quitclaim.
But quitclaims are tricky. Although a quitclaim is called a "quitclaim deed," in Texas, it is not actually a property transfer deed and does not transfer title. Texas quitclaim deeds can only be used to deny or relinquish to another any interest the individual might have in a given property.
Deeds in Texas
The terms "deed" and "title" are sometimes used interchangeably in real estate matters, but they are not synonymous. Title describes a concept of ownership, not an official document. The phrase, "I have title to this land" conveys the idea of ownership of a Texas property, but it is not a legal document establishing ownership.
The deed is, in fact, a legal document. The written deed is evidence that someone holds legal ownership (title) to a property. Texas has many types of deeds, but general warranty and special warranty deeds are the most common.
These are property deeds that carry warranties or promises about title. And if a warranty made by the grantor turns out to be untrue, the grantee can take legal action to recover damages.
No Standard Deed Form in the State of Texas
There is no standard form for a deed in Texas. But in order for a deed to be valid, the parties must be named; the intent to convey property must be clear from the wording; the property must be identified with reasonable accuracy; and the deed must be signed by the grantor and delivered to the grantee.
Unlike some states, Texas does not require that a deed show the actual purchase price, and it is customary to recite that the consideration paid is “ten dollars and other valuable consideration.”
General and Special Warranty Deeds in Texas
Most of the deeds commonly used in Texas are one of two types of warranty deeds. Warranties are promises about potential title issues. A general warranty deed includes the most guarantees about a title, while a special warranty deed contains many warranties, but doesn't go back as far in the chain of title.
The chain of title is created by linking a seller and a buyer, then, when the buyer sells, their buyer, then the person taking from this buyer, up to the current transaction.
General Warranty Deeds
The general warranty deed is the strongest form of deed in Texas and the most common for residential transactions. It contains language promising that the grantor will defend the grantee against anyone claiming any interest in title no matter when that occurred in the chain of title.
Special Warranty Deeds
A special warranty deed also transfers title with both express and implied warranties and offers promises from the grantor to the grantee about the state of title.
It promises that the title is free and clear from other claims, but the warranty is extended only to transfers that occurred during the time the grantor owned the property, not to anyone else in the chain of title. That is, it does not protect the new owner against claims that arose before the grantor owned the property.
Quitclaim Deeds in Texas
A quitclaim deed is not really a deed as such. It can be viewed as a type of estoppel, since the "deed" simply releases any and all interest the grantor has in the property to another person.
But, under a quitclaim deed, the grantor does not transfer any title, nor do they make any promises about whether they have any interest and, if so, what interest they may hold. It makes no warranties regarding the validity of the title. This means that another person or entity could come forward to interfere with the rights of the new property owner.
While in some states, quitclaim deeds are valid and regularly used to transfer title among family members, this is not true in Texas. In fact, quitclaims are rarely used in Texas. Given the lack of warranty and unconditional conveyance language, Texas title companies will not insure title if there are quitclaim deeds found in the chain of title.
Quitclaims in the Chain of Title
Quitclaim deeds in a chain of title can create problems for a property owner or a seller because the quitclaim deed may prevent the property from being insurable. This is because Texas law provides that an unrecorded instrument is binding against a subsequent purchaser who does not pay valuable consideration for the property.
In Texas, a property deed may be recorded in the real property records if it is signed and acknowledged by the grantor. However, this is not mandatory. There is no requirement that a deed be recorded in order to be valid and an executed deed is fully effective between the two parties.
Importance of Recording Deeds
Texas is a "notice" state. Under Property Code Section 13.001, a recorded deed gives notice to the world of the transfer and also establishes priority in case an unscrupulous seller attempts to convey the property twice.
If the quitclaim deed is unrecorded, a later buyer who pays value for the same property without knowing about the unrecorded transaction has priority over the quitclaim. However, the quitclaim will take precedence over a later buyer who does not pay value.
Recording a deed, no matter what type, makes it easier for title companies to research and insure the chain of title. Title companies insist on recording for this reason.
Texas Quitclaim Statute of Limitations
In 2021, a new law came into effect in Texas that applies to quitclaim deeds recorded after September 1st, 2021. It establishes a four-year statute of limitations for a prior deed to come into the chain of title and take effect. The law was intended to open the door to allowing title companies to insure those with a recorded quitclaim in the chain of title.
Given the ambiguity of what a quitclaim deed is conveying, the holder of a quitclaim deed cannot prove title to the property by the document alone. In fact, courts took the position that use of this type of deed should flag doubts about what interest the grantor in fact had.
Difficulty of Quitclaims in Chain of Title
So any buyer who takes under a quitclaim deed was held to be "on notice" of possible title issues like unrecorded interests. That is why it has been difficult if not impossible to get title insurance on a property with a quitclaim in the chain of title.
However, this is not true in other states. The general rule in states other than Texas is that a quitclaim, recorded by a buyer in good faith and without knowledge of competing claims, will take precedence over earlier, unrecorded claims.
The new Texas statute of limitations means that when a good faith buyer takes property under a quitclaim and records that deed, unrecorded interests have only four years to appear and contest title. Any conveyance after four years can be insured.
Teo Spengler earned a J.D. from U.C. Berkeley's Boalt Hall. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an M.A. and an M.F.A in creative writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.