Deeds: Transferring Title to Real Property

A deed is a written instrument that passes ownership of property from one person to another.


There is no standard form for a deed, but there are requirements for a deed to be valid. The deed must be in writing, the two parties should be named, it must include the intent to convey the real property, it must contain the legal description of the real property, and it must contain a signature and acknowledgement of the grantor (the person transferring the property).


A deed does not need to be recorded to be valid. However, Texas is a notice state, which means that recording the deed in the deed records gives notice to the world of the transfer and establishes priority. Recording a deed makes it easier for title companies to research and insure the chain of title and keeps the seller from attempting to sell to another person.


All deeds are not the same. Each deed accomplishes different objectives with some limiting liability, but the wording in the deed is critical. Deeds commonly used in Texas include a General Warranty Deed, Special Warranty Deed, Deed Without Warranties, Quitclaim, Assumption Deed, Wraparound Deed, Trustee’s Deed, Transfer on Death Deed, Deed in Lieu of Foreclosure, and Correction Deed.


General Warranty Deed

A general warranty deed is the preferred deed for a buyer because it warrants the entire chain of title all the way back to the sovereign and it binds the grantor to defend against any and all title defects. These deeds are often seen in sales of residential property.


Special Warranty Deed

A special warranty deed is the preferred deed for a seller as it only warrants title during the grantor's ownership. These deeds are often seen in sales of commercial property.


Deed Without Warranties

A deed without warranties does as it says- conveys a property with no warranties whatsoever. Usually, this type of deed comes with a lower price paid.


Quitclaim

A quitclaim is not a true deed at all. Yet, many people contact lawyers stating they want one drafted. A title company will not insure a quitclaim and will require a proper deed be obtained instead. This is the least desirable of the listed conveyances.


Assumption Deed

Assumption deeds are general or special warranty deeds stating that the grantee will assume liability for existing indebtedness and promise to discharge one or more liens against the property. Debts secured by liens on the property remain in place even if title is transferred. The grantee declares their assumption obligation to the grantor but not to the lender. The grantor has not been released from the existing note unless the lender approved the assumption and released the grantor in writing.


Wraparound Deed

A wraparound transaction is a form of creative seller financing that leaves the original loan and lien on the property in place when the property is sold. The buyer makes a down payment and signs a new note to the seller for the balance of the sales price. The wrap note, secured by a new deed of trust, becomes the junior lien on the property. The buyer makes monthly payments to the seller on the wrap note and the seller in turn makes payment to the original lender.


Trustee/Foreclosure Deed

A trustee’s deed is delivered by a lender’s trustee to the successful bidder at a foreclosure sale. The buyer at a foreclosure sale acquires the property as is without any warranties except as to the warranty of title. A foreclosure deed is one of the cleanest titles available, but it does not eliminate any taxes owed.


Transfer on Death Deed (TODD)

A TODD is a non-probate method of transferring title to real property when the owner dies. A TODD is not revoked by a Last Will and Testament but can be revoked through a revocation.


Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is designed to transfer property to a lender in satisfaction of a debt in exchange for a full and complete release.


Correction Deed or Correction Instrument

Errors in a deed such as errors in metes and bounds or erroneous description of a party’s capacity can be corrected by a correction instrument. A person with personal knowledge of the facts may execute this type of correction instrument without the others, but a copy of the correction instrument must be sent to each party to the original instrument. More serious corrections, called material corrections, require a correction instrument executed by each party to the original recorded instrument.


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