In Texas real estate transactions, property deeds are extremely important, and there are formal conventions that pertain to them. For instance, to convey title to real estate in Texas, the grantor must execute a deed that is acknowledged before a notary public. The deed must also be presented to and accepted by the grantee and then filed of record in the county clerk’s office. This final step of filing puts the public on notice of the property transfer. Failure to file the deed can subject the property to future claims by third parties.
What Is the Difference Between a Title and a Deed?
Before discussing the most common types of property deeds, it’s important to explain the difference between a title and a deed. For real estate purposes, title refers to ownership of the property. Title means you have the right to use the property. In contrast, a real estate deed is the legal document that transfers title from one person to another. That said, it’s important to remember that the type of deed chosen for your real estate transaction matters, both regarding your rights and the deed’s impact on any potential issues with the property title. Property deeds also relate to the kind of title insurance, if any, that is available to you.
7 Common Types of Property Deeds in Texas
The following are the most common types of property deeds you’re likely to encounter in Texas:
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General Warranty Deed
A general warranty deed is the most inclusive type of deed. As the term “warranty” implies, it warrants that the state of the title is good. This means that the buyer of the property—the grantee — has legal recourse against the seller —the grantor — for any future claim to the property.
Here, the grantor guarantees that they have sole claim to the property and that no other entity has a claim or lien against it.
This type of deed promises the new titleholder that they can legally purchase, possess and enjoy the property. As such, it is the preferred instrument in transactions involving a mortgage lender and a title company. Obtaining a general warranty deed involves a thorough title search, which means the buyer may be able to purchase a title insurance owner’s policy for added protection and peace of mind.
It should be noted, however, that some grantors may not be comfortable making such broad warranties, particularly when title defects may have existed before the grantor obtained the property.
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Special Warranty Deed
A special warranty deed is more limited and is preferred by grantors who are not comfortable granting a general warranty deed. With a special warranty deed, the grantor only warrants the property title for the time they owned it.
In other words, the grantor is only bound to defend against title defects that occurred during their period of ownership. Therefore, the special warranty deed does not offer protection against claims arising before the grantor’s ownership.
This situation, in turn, can affect the protection that would otherwise be covered by a title insurance owner’s policy and may leave the grantee without full protection against future title claims.
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Grant Deed
Because this type of deed is less familiar than either a general warranty deed or special warranty deed, you might ask, “What is a grant deed?”
In Texas, a grant deed is an instrument through which a property owner can transfer real estate with implied covenants of title. An implied covenant is an agreement that is not specifically stated but is assumed to be true by both parties involved.
By including the words “grant” or “convey” in the grant deed, the grantor guarantees that they have not transferred title to the property to anyone other than the grantee. Further, this language guarantees that, at the time of the legal property transfer, the property is free from anything that would prevent the transfer.
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Deed of Trust
A deed of trust is not so much a deed in the traditional sense as it is part of the mortgage process. While a traditional warranty deed involves a grantor and a grantee, a deed of trust includes three parties:
- The lender, also called the beneficiary
- The borrower, also called the trustor
- The trustee, a third party that may be a title company
The trustee can be anyone willing to take on the responsibilities of the role, but lenders traditionally choose companies that specialize in trustee services.
In Texas, the trustee under a deed of trust has the power to sell the property through a nonjudicial foreclosure process if the borrower defaults and the required legal procedures are followed. This feature of a deed of trust can allow a lender to foreclose without first filing a traditional lawsuit.
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Quitclaim Deed
A quitclaim deed is an instrument for conveying an interest in a property and does not come with a warranty. You might think of it as an “as is” deed in which the grantor passes to the grantee any title, interest or claim they have to the property—but nothing more.
The grantee receives whatever interest the grantor has in the property, but there are no guarantees about the extent or quality of that interest.
Although quitclaim deeds are sometimes considered for transfers between family members or other limited circumstances, they may create title and title insurance complications in Texas. Before using a quitclaim deed to transfer property, add or remove an owner, make a gift or address a deed-related issue, it is a good idea to consult the title insurer and a real estate attorney.
Quitclaim deeds may appear attractive because of their simplicity, but a deed without warranties or another properly drafted instrument may be a better solution—even between family members and good friends.
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Bargain and Sale Deed
A bargain and sale deed includes a warranty that the grantor has title to the property, but it does not guarantee that the property is free of claims or encumbrances. This is referred to as a bargain and sale deed without covenants.
If a bargain and sale deed specifically states one or more additional guarantees, it is called a bargain and sale deed with covenants, making it similar to a special warranty deed.
Bargain and sale deeds are most often used when property is transferred pursuant to a foreclosure, tax sale or settlement of a deceased person’s estate. They may also be used in some of the same situations as a quitclaim deed. One benefit of a bargain and sale deed is that it may give the grantee a greater level of protection.
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Transfer on Death Deed
In addition to the property deeds commonly used in real estate transactions, Texas recognizes the transfer on death deed, or TODD, as an estate planning tool.
The goal of a TODD is commendable: to provide a relatively simple mechanism for transferring ownership of real property to a beneficiary, without probate, when the property owner dies.
Unfortunately, using a TODD can create complications. For example, transferred property may remain subject to certain creditor claims when the deceased owner’s probate estate does not have enough assets to satisfy those claims. This could create significant problems for the beneficiary.
Choosing the Appropriate Type of Deed Matters
It should be apparent from this summary of property deeds in Texas that many options are available. Whether you are a first-time buyer or an experienced investor — buying a one-bedroom condo, an undeveloped tract of land or a multi-unit building — you have money on the line, and we’re here to protect you.
The type of deed used can affect the buyer’s ownership rights, the seller’s future liability, available title insurance, and the parties’ protection against title defects and other claims. A real estate attorney can help you determine which legal document is appropriate for your transaction.
Get Legal Real Estate Assistance from Hammerle Morris
Initially, many purchases seem easy, but closings are increasingly complex, time-consuming and stressful. You can count on our team of experienced real estate attorneys to explain and simplify the process.
Based on our years of experience, we know that every real estate transaction is unique. Our unwavering goal is to understand your needs and help you achieve them.
Whether you are a buyer or seller, contact Hammerle Morris today to schedule your initial consultation and let our experienced real estate attorneys go to work for you.
Virginia Hammerle is a licensed Texas attorney whose practice includes estate planning, probate, guardianship and litigation.
This article is for informational purposes only and does not constitute legal advice.
