Buying and selling land may seem simple. Property ownership is transferred by a written document called a deed. There is no difference between a “sale” deed and a “title” deed; both terms describe the same type of document. A title document for land is a deed.
Texas Deed Forms
Texas has a deed form in its statutes. You can find it at Texas Property Code Section 5.022. Generally, you will be a lot better off using the statutory form than downloading a form from the internet. There is a more modern form that was developed by the State Bar of Texas that is commonly used by lawyers.
Why Traditional Deed Wording Matters
Both deed forms, at first glance, look archaic. They contain phrases such as “to have and to hold the above-described premises, together with all and singular the rights and appurtenances thereto in any wise belonging.” If you are drafting your own deed – always a risky proposition – you might be tempted to delete phrases like that. Don’t. Those phrases are backed by hundreds of years of case law and legal custom. They mean something to courts and title companies.
Different types of deeds – including general warranty deeds, special warranty deeds and quitclaim deeds – can provide very different rights and protections. The wording of the deed determines what property rights are transferred and what warranties, if any, the seller provides.
How Important is the Deed in a Property Transfer?
Consider this: every action in a land sale leads up to the exchange of the deed. Without a valid written deed, legal ownership generally does not transfer to the buyer. The heart and soul of the deed is the phrase “[Sellers] have granted, sold and conveyed, and by these presents do grant, sell and convey…” This language transfers the seller’s – or grantor’s – ownership interest to the buyer. Depending on the type of deed and its exact wording, it may also include warranties regarding the property title.
Other Key Legal Documents in a Property Sale
There are some other documents that are involved in most land sales.
Earnest Money Contract
An earnest money contract is the written agreement between a buyer and a seller that contains the terms for the sale of the land. The conditions in the contract must be met before the deed is exchanged.
Promissory Note
A promissory note is the document that contains the terms for lending the money to fund the sale of the land. In most land transactions, the buyer pays with a combination of cash and borrowed money. The company or person lending the money to the buyer requires the buyer to sign a promissory note before it pays the money to the seller.
Deed of Trust
A deed of trust gives the lender a security interest in the land to secure payment of the promissory note. If the buyer does not repay the loan as agreed, the deed of trust may allow the lender to foreclose on the property.
Title Search and Title Insurance
A title search examines public records and the property’s ownership history for potential title defects, liens, easements or other encumbrances. An owner’s title insurance policy protects the buyer against covered title problems, subject to the policy’s exclusions and exceptions.
What Happens at a Real Estate Closing?
The actual purchase transaction is called a closing. Most closings are coordinated by the title company that issued the title policy. The title company holds the deed signed by the seller until the buyer has paid the purchase money.
Once the purchase money is paid, the title company files, or records, the deed in the county records where the land is located, and then provides the buyer with the recorded deed or a copy. If the purchase was funded by a loan, then the title company also records the deed of trust in the county records. The signed promissory note and applicable loan documents are delivered to the lender.
Why Recording the Deed Matters
An unrecorded deed may be binding between the parties, but it can be void as to certain creditors or subsequent purchasers who paid value without notice of the deed. Recording the deed in the appropriate county records provides public notice of the property transfer and helps protect the buyer’s ownership rights.
Hammerle Morris Law Firm Can Help With Your Title Documents
Land sales may appear simple. The documents are not. Do not go it alone with internet or fill-in-the-blank forms.
If you are buying or selling property, preparing a deed or dealing with a property title issue, the experienced real estate attorneys at Hammerle Morris Law Firm can help you understand your legal options and protect your interests. Schedule a consultation with our team today.
Virginia Hammerle is in her fourth decade of practicing law. She is Board Certified in Civil Trial by the Texas Board of Legal Specialization and an Accredited Estate Planner. Contact her at legaltalktexas@hammerle.com.
This article is for informational purposes only and does not constitute legal advice.
