Quitclaim Deed Texas

What is the purpose of Quitclaim Deed Texas, how do they work, and why are they so useless? This article discusses a quitclaim deed, what it serves, and why it is relatively useless in Texas. For more information about a real estate transfer using a quitclaim deed, or if you deal with one in California, contact Attorney Real Estate Group.

 

Quitclaim Deed

Quitclaim deeds aren’t deeds at all. They’re merely documents that transfer any title to a grantee that may exist with the grantor. This document does not grant any title. It is a more deed-like estoppel than a deed, so a quitclaim deed denies property ownership.

The quitclaim deed becomes an estoppel rather than an affirmative property rights grant. Property owners or sellers may have problems if a quitclaim deed appears in a chain of title because it may prevent them from being able to insure their property.

 

According to Texas law

According to Texas law, an unrecorded instrument binds a subsequent purchaser without paying valuable consideration for the property. There is often no transfer of valuable consideration with a quitclaim deed.

As a result, a person who believes she acquired a property by quitclaim deed in 2010 may later discover that title is uncertain or limited if, after the transaction, an instrument from 2005 emerges into the chain of title that had not been known to the buyer and possibly to the seller. A buyer without consideration is not protected by Texas law, again. Due to this, title insurance companies tend to refuse to insure title if the chain of title includes a quitclaim deed.

 

Quitclaim Deeds in Texas, Why to Avoid Them

Buyers should be wary of quitclaim deeds by the very nature of the deed. Simply put, they are receiving a deed that claims to transfer title to the property, but no guarantees or warranties exist regarding the transfer. Grantees may pay valuable consideration for quitclaim deeds that provide no title to anything and have no recourse against sellers. Quitclaims deeds are prime examples of buyer beware.

Not only do buyers of property fear quitclaim deeds. In Texas, title and insurance companies are often reluctant to insure quitclaim deeds for good reason. Whether the title defects appear in the property’s record or not, Texas law requires buyers using quitclaim deeds to notify them of them.

 

A prior unrecorded transfer of interest

The buyer may be unaware that a prior unrecorded transfer of interest occurred even when a title search shows no defects, thereby making the prior transfer superior to a quitclaim transfer. There are apparent reasons why title insurers are wary about quitclaim deeds: it can be extremely difficult or even impossible to determine if a quitclaim deed transfers an interest.

 

In Texas, When Can You Use A Quitclaim Deed?

Quitclaim deeds in Texas have significant drawbacks but are not wholly useless in some instances. However, they are a quick and efficient way to transfer titles in some situations. A quitclaim deed, for instance, may seem confusing because it is difficult to determine what it conveys.

Still, what the grantor is relinquishing is apparent: any interests in the property they may hold. It can, therefore, be useful for grantors who desire to relinquish any interest they may have in a property to clear the title.

It is not uncommon for these situations to occur, and they usually occur in transfers between family members or close relationships rather than in standard, arm’s length transactions. A buyer of real property who wants to transfer title using a quitclaim deed in the ordinary course of business should be highly cautious.

 

Deed types in Texas

Deeds in Texas can fall into four different types. Although there are other types, these are the most common ones.

• General warranty deeds
• Special warranty deeds
• Deeds without warranty
• Quitclaim deeds

 

Texas general warranty deeds

Generally, in Texas, a general warranty deed is the type of deed used most often. In addition to guaranteeing that the title is free of liens, easements, or other title problems, this deed assures the buyer that the title will be free of issues. In warranty deeds, the seller guarantees or warrants that the property has full title and will pass to the buyer. Warranty deeds offer the buyer more protection than other deeds.

 

Deeds of exceptional warranty in Texas

In some situations, extraordinary warranty deeds apply, even though they provide less protection than general warranty deeds. A seller does not guarantee a title is free and clear of defects from the beginning of time until the present. The seller only guarantees a good title as of the date they acquired the property.

Through a special warranty deed, the seller guarantees that they have not added any liens or easements to the property during their ownership, which would cause a problem with the title. Even so, the seller cannot guarantee or warranty that someone else hasn’t created a defective title before the seller owned the property under a special warranty deed.

Therefore, there is no doubt that general warranty deeds provide buyers with more excellent protection than extraordinary ones. However, sellers would likely prefer to use extraordinary warranty deeds.

 

Without warranty deeds in Texas

People avoid using Texas quitclaim deeds, so a Texas deed without warranty occurs, except when a quitclaim deed might otherwise apply. Moreover, a deed without a warranty does not guarantee the title’s quality, so it does not protect a buyer.

It conveys the title to the buyer but doesn’t offer any warranty against any defects. Despite selling and conveying the property to the buyer, a deed without warranty is only slightly better than a quitclaim deed. If a defect occurs in the title later on, a buyer cannot sue a seller who used a deed without warranty. This type of deed is not a good choice for buyers because it lacks warranties.

 

Texas Quitclaim Deeds Have Other Uses.

In Texas, quitclaim deeds are used only under certain circumstances by buyers. One example would be a gift between close friends and family. When buying a quitclaim deed or receiving a gift, make sure you know the seller and trust them. Otherwise, you could receive a worthless document.

 

 

There are two other times when people use quitclaim deeds in Texas: when someone divorces and one ex-spouse quitclaims the property interest or when another spouse adds a spouse to the deed. Although this is the case, many former and current spouses prefer a deed without warranty instead of a Texas quitclaim deed.

It doesn’t mean you can’t use a quitclaim deed, but using one without a warranty in these circumstances is better. It isn’t even necessary for a buyer or seller to record a deed in Texas for it to take effect.

 

Texas Quitclaim Deed Forms by Other Names

You can also call a Texas quitclaim deed a quitclaim (with a space between “quit” and “claim”). Quitting claims deeds and quick claims deeds can be used interchangeably. Quitting claims deeds are not the same as quick claim deeds (or quick claim deeds). Quick claim deeds and quick claim deed forms are not available.

Quitclaim deeds are sometimes called deeds without warranty or non-warranty deeds. Most states make a trivial difference between quitclaim deeds and deeds without warranties. However, Texas title insurance companies distrust quitclaim deeds, which is why distinguishing quitclaim deeds from deeds without warranties is essential.

 

In What Ways Are Texas Quitclaim Deeds Different From Other Forms Of Deeds?

The absence of a title warranty defines quitclaim deeds in Texas and deeds without warranties. An owner of property transfers whatever interest they own to the recipient. As a result of the deed, the person receiving the property has no legal rights against the transferor if there is a problem with its title.

 

Using Texas Quitclaim Deeds for Estate Planning

It is essential to know that Texas recognizes three deed types popular in Texas estate planning: quitclaim deeds and deeds without warranty. Other types of deeds differ by the probate avoidance features they offer.

 

·         Texas transfer-on-death deed.

A transfer-on-death deed in Texas names a beneficiary to take title upon the owner’s death. TOD deeds do not restrict the owner’s ability to sell, mortgage, or revoke the title.

 

·         Texas life estate deed.

The Texas life estate deed divides real estate ownership into two distinct interests. The first interest, a life estate, entitles the property holder to own it until death. In the event of the death of the life estate holder (or life tenant), the interest holder has the right to take title. To impair the remainder interest, the life tenant must have the consent of the rest interest holder before selling or transferring the property.

 

·         Texas enhanced life estate deed.

Life estate deeds, or life estate deeds, are variations of life estate deeds recognized by only a few states. With a ladybird deed, a life tenant has more substantial rights in the property. The deed explicitly grants the life tenant the right to sell or transfer the property without the consent of the remainder beneficiary.

There is a distinction between the probate-avoidance feature and the warranty of title of a deed. This makes it possible for two names to apply to the same deed. Texas ladybird deeds, for instance, can also be quitclaim deeds or deeds without warranties if they transfer title without warranty and reserve an enhanced life estate.

 

Deed Without Warranty or Quitclaim Deed in Texas

Deeds without warranty or quitclaim deeds do not have a statutory form in Texas. Either form must comply with Texas’ general deed requirements and clearly state that there is no warranty of title.

 

Deed Without Warranty and Quitclaim Deed Requirements in Texas

Unlike the Texas statutory warranty deed form, the Texas quitclaim form granting clause does not include the phrase grant, sell, and convey.

There is the same grant, sell, and convey language in the granting clause of a Texas deed without warranty form as in other Texas deed forms such as warranty deeds and extraordinary warranty deeds.

 

With or without a warranty

A Texas deed with or without a warranty typically includes an implied warranty. However, a Texas deed without a warranty also includes a separate section excluding all warranties, including implied warranties.

There is no liability on the part of the deed signer for title problems, regardless of whether it is a quitclaim deed or a deed without warranty. Generally, Texas quitclaim deeds release the transferor’s interest (if any) to the transferee, while Texas deeds without warranties transfer the property to the transferee in the form of the transferor.

 

Requirements for Texas General Deeds

The provisions of a quitclaim deed or a deed without warranty must also apply. For example, a quitclaim deed must include:

• A valid legal description;
• Consideration statement; and
• If there is more than one transferee, this describes how co-ownership will work.

The deed must also be formatted correctly as part of the recording process. For example, the font and margins must be the right size, and the signature block and notary acknowledgment must all follow Texas law.

 

The New Limitation Statute for Quitclaim Deeds

Senate Bill 885 came into effect in September 2021 and allows quitclaim deeds to take effect after that date. A prior deed is limited to taking effect for four years. As of September 1, 2021, this law only applies to quitclaim deeds.

When buying a property, it is essential to know its title history. Using appropriate deeds to convey the title consistent with the contract’s goals or parties’ expectations is also essential. It is sometimes necessary to address title issues from past conveyances so that the title can be insurable.

 

Bottom Line

Think about the advice of most Texas attorneys, who advise clients to use other deeds instead of quitclaim deeds when deciding which type of deed to use. A special warranty deed may also be worth considering when a buyer isn’t concerned about the seller’s title. You have several options when choosing a deed to transfer property in Texas if you’re a buyer. If you want the most excellent protection, use a general warranty deed.