The Definition of a Special Warranty Deed and Deed of Trust in Texas

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A deed is a document that evidences real estate ownership. The state of Texas recognizes a handful of different types of deeds, all of which transfer a real property interest, but the protections they offer are not the same.

Two popular deeds are the Texas general warranty deed and the Texas special warranty deed, but several other deeds are also used. Don’t confuse these with a Texas deed of trust, a legal document that gives the creditor remedies in case a borrower doesn't keep up the payments on the note.

What Is a Deed?

What exactly is a deed? A deed is a legal document that contains the legal description of a parcel of real estate that both evidences and conveys title to real property. It works in the same way that the pink slip for a vehicle works, showing ownership and being used to transfer ownership.

Just so, a seller of real estate must sign a property deed and present it to the seller during a real estate transaction. That's how real property title is transferred in Texas.

A Deed Is Evidence of Property Ownership

A deed does more than just transfer title to a new owner; it also acts as evidence of ownership of the property to the world. Once the transfer is complete and the deed is signed before a notary public, the grantee (buyer) can file it in the county clerk’s office.

Once filed, the deed becomes part of the record and can be viewed and accessed by members of the public. That puts the public on notice that the grantor’s ownership of the real property is over and it now belongs to the grantee, the new owner.

The recording of the deed protects the buyer from creditors who might try to put liens on the property to secure the previous owner's debts.

Recording a Deed

Recording a deed is not a legal requirement in Texas. That is, the state has no law requiring that a deed be recorded in order to be valid. When it comes to issues between buyer and seller, the deed is valid without being recorded.

However, in Texas, recording the deed establishes priority if a dishonest seller transfers the property twice.

Types of Property Deeds in Texas

Texas law recognizes four types of property deeds. Any one of them is sufficient to transfer an interest in real estate. They are:

  • General warranty deed.
  • Special warranty deed.
  • No-warranty deed (deed without warranty).
  • Quitclaim deed.

Each type of deed has it’s own best uses.

General Warranty Deed in Texas

The most popular legal document for real estate transactions in Texas is the general warranty deed. “Warranty" means a legal promise or a guarantee provided by the grantor to the grantee that specific facts or conditions set out in the deed are true or will happen.

Clearly, a buyer of either residential or commercial real estate wants to be sure that the individual or business selling the property actually owns the interest being transferred. They also want to be certain that they know about liens and encumbrances on the property and any other interests that may be held by others.

In a Texas real estate transaction, the seller must lists all encumbrances, liens and easements that affect the property or title.

In a general warranty deed, the grantor warrants that they are the owner of the property with full title and full rights to transfer it. They guarantee that their title to the property is free and clear of any claims or encumbrances other than those listed in the disclosure documents. The seller also agrees to defend title to the property against anyone asserting interests in the property.

Special Warranty Deed in Texas

The special warranty deed might sound like it would offer more guarantees than the general warranty deed since it is "special." But a special warranty deed provides far less protection for the buyer than a general warranty deed does. A special warranty deed provides only a specifically limited warranty.

A general warranty deed guarantees that the property conveyed to the buyer is owned by the seller and is free of all potential claims other than those disclosed in the real estate transfer documents.

By contrast, a special warranty deed doesn't match these promises. In fact, the grantor of a special warranty deed warranties only that they did not encumber the property or transfer an interest during the time they owned it. The seller makes no promises or pledges about what may have occurred earlier.

A seller who gives title under a special warranty deed guarantees that the buyer won’t face any legal action or title issues as a result of events that happened while the seller owned the real estate. It does not offer any promises or guarantees that earlier owners held title free and clear.

Other Types of Deeds

No-warranty deed:‌ There is a no-warranty deed in Texas, as well. A seller who doesn't want to make any warranties of title can use a deed without warranty. This type of deed offers no protection and is generally used only as a means of clearing up past title problems.

Quitclaim deed:‌ A Texas quitclaim deed offers even less in terms of promises than does a no-warranty deed. It is a legal document that relinquishes to the seller any interest or claim the grantor might have to the property title without any promises about what interest they own, if any.

Quitclaim deeds, like no-warranty deeds, are generally used to clear up title issues, rather than to transfer real estate ownership. Alternatively, they can be used for transactions between family members.

Deed of trust:‌ A Texas deed of trust, together with a promissory note, is one of the loan documents used when a buyer finances a real estate purchase through a lender. The promissory note, or real estate lien note, is basically a written promise of repayment that the person buying the property makes to the lender that provides the financing.

Details of this repayment are set out in the terms of the note, including the interest rate, the loan fees and the period of the loan.

The deed of trust is a legal document that gives the lender remedies in case the borrower doesn't keep up the payments on the note. It allows the lender to foreclose on the property if the borrower doesn't repay the note as agreed. Foreclosure is the process whereby the lender sells the property, usually at public auction, and is repaid from the proceeds.

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