The following is a brief explanation of deeds in Texas. To determine which will work best for your desired application, contact one of our real estate attorneys.
What is a Deed?
A deed is a written document that establishes legal and equitable title to real property. Although the deed is only one of the documents used in a majority of real property transactions, it is arguably the most important document to the buyer (Grantee) because it represents the title conveyed and the obligations owed to the buy by the seller (Grantor).
Texas statutes and case law establish five requirements for a deed to be valid. The deed must:
- be in writing;
- be signed by the seller;
- include the buyer’s name;
- contain the legal description of the property; and
- be delivered to and accepted by the buyer.
Different TypeS of Texas Real Estate Deeds
There are three basic kinds of commonly used real estate deeds in Texas:
- General Warranty Deed – Contains both express and implied warranties. This is the preferred form of deed from a buyer’s standpoint because it expressly warrants the entire chain of title and it binds the Seller to defend against any defects of title, even if those defects were created prior to the date the seller took ownership. This is the most common type of deed used in residential real estate transactions.
- Special Warranty Deed – Seller only warrants title from the time it took ownership of the property. In other words, the seller is only bound to defend against defects of title that occurred during its period of ownership. Special Warranty Deeds are commonly used in commercial transactions.
- Deed Without Warranties – This is simply a conveyance of property without any express or implied warranties. Thus, the seller is not bound to defend against any defects of title regardless of when they arose.
TEXAS IS A “NOTICE” STATE
As mentioned above, conveyances and agreements concerning real property must be in writing to be enforceable between the parties to a transaction. However, to be enforceable as to third persons, these instruments must be filed in the public record.
The Texas Recording Act is found in Section 13.001 of the Texas Property Code. This statute requires a conveyance of real property or an interest in real property or mortgage or deed of trust to be acknowledged, sworn to, or proved and filed as required by law in order to be valid as to a creditor or to a subsequent Bona Fide Purchaser. However, the unrecorded instrument is binding on all parties to the instrument, those parties’ heirs, and on a subsequent purchaser who DOES NOT pay valuable consideration or who HAS notice of the instrument.
BONA FIDE PURCHASERS
As you may have noticed, the Texas Recording Act only covers a “conveyance” of real property or “an interest in a mortgage or deed of trust.” The Bona Fide Purchaser Doctrine, created by common law or case law, steps in and provides that certain conveyances or interests of real property are not enforceable against a subsequent purchaser for value unless that subsequent purchaser had actual or constructive notice of the prior conveyance.
To clarify, the Bona Fide Purchaser Doctrine allows a subsequent purchaser to prevail over a prior competing interest in real property where the subsequent purchaser (1) acquired the conveyance or interest (2) for value (3) in good faith and (4) without notice of the prior claim.
TYPES OF NOTICE
There are different forms of notice that may exist. The first and strongest form of notice is “Actual Notice.” Actual Notice exists when the subsequent purchaser knows for a fact that the prior competing interest exists—he has seen the instrument.
The second form of notice is “Constructive Notice.” This form of notice comes from the Act—as soon as an instrument is properly recorded, the world has Constructive Notice of your interest.
The third, and rarely mentioned, form of notice is “Inquiry Notice.” This type of notice exists if the appearance of the real property is such that the subsequent purchaser should have asked more questions (or inquired) about the title to the property. For example, if Landowner A attempts to sell Buyer B a vacant lot, but there is a home constructed on the lot, B will be charged with Inquiry Notice, even if B had never seen the lot or the home built upon it.
The Farah Law Firm is Here to Help You
Our law firm is here to take you step by step through the process. Once a contract is signed, it may be too late or very difficult to correct errors, so let us help you now. Our office is conveniently located in Mansfield, right in the middle of the Dallas-Fort Worth Metroplex. Call our real estate lawyers in Texas today and let our experience and vast knowledge of the Texas Property Code give you peace of mind by ensuring your next purchase or sale is properly executed.Contact us for peace of mind!