Understanding Texas Deeds

Monday, January 21, 2008
Contributed by: James Wester

What is the difference between a "general warranty deed" and a "special warranty deed"? What is a "quit claim deed"? Does the type of deed really matter? These are some fairly common questions because most people don't understand the differences in the types of deeds in Texas.

When you sell your land (including your home, commercial property, raw land, etc.), it is reasonable for the buyer to want you as the seller to warrant or guarantee that you actually own the real property and that you have the right to sell it. If the buyer has a lender, the lender (or the lender's lawyer) will also want to be sure that the buyer gets good title to the real property and that the lender's lien is valid. This type of warranty or guarantee is referred to as the "warranty of title" and is made in the Warranty Deed. There are two common types of Warranty Deeds: the General Warranty Deed and the Special Warranty Deed. While the term "special" sometimes makes a buyer think they are getting more warranty for their money, a buyer actually gets a lesser warranty with a Special Warranty Deed.

In a Special Warranty Deed, a seller guarantees to the buyer that while the seller has owned it, the seller has not done anything to adversely affect the title to the real property. A Special Warranty Deed will include language limiting the warranty which says something similar to "Grantor does hereby bind itself and its successors and assigns to warrant all and singular the property unto Grantee, its successors and assigns, against every person lawfully claiming by, through, or under Grantor, but not otherwise." The underlined is the key language that differentiates the deed as "special".

What is the potential impact of a Special Warranty Deed? If a seller has already sold the real property to someone else before trying to sell it to you or has a lien put on the real property without telling you, then the seller has breached the warranty of title because the seller is the one that created the problem. To the contrary, if the problem with the title to the real property was created by someone other than the seller, e.g. someone forged the seller's or a prior owner's signature on a deed or other legal document, the seller would not be liable to you because it was not a personal act of the seller that resulted in the title defect. Consequently, most sellers prefer to sell their real property by executing a Special Warranty Deed. In commercial transactions, Special Warranty Deeds are fairly common.

For the reasons discussed above, you can see why most buyers, if given a choice, prefer to have a General Warranty Deed. When a seller provides a General Warranty Deed, the seller promises to the buyer that: (i) the seller has not personally done anything that would adversely affect the title to the real property; and (ii) no one before the seller has done anything that would adversely affect the title to the real property. If it is later determined by you that your title as a buyer is clouded or impaired for any reason other than your own, the seller will be liable to you for that loss even if the seller had no reason to know of the problem. It may be that the seller has recourse against prior owners because of the deed into the seller.

CAUTION: Don't simply rely upon the title of a deed. You need to be sure to read the deed to determine if it is a general or special warranty deed.

The issue of which type of deed transfers title to the real property is sometimes not a point of contention. If a seller provides or a buyer obtains a title insurance policy from a good title company, the title insurance can provide protection against many of the more common title problems. If a problem arises that is covered by the title insurance policy, the buyer makes a claim on the policy and the title insurance company either compensates the buyer for the loss or pays the cost to correct the problem.

As a side note, I also get questions about "Quitclaim Deeds" and what warranties they provide. Put simply, a Quitclaim Deed only transfers something IF the seller has something to transfer and does not include a promise by the seller that the seller owns it or has anything to transfer. In short and as legal cases note, it conveys any title, interest, or claim of the seller in the real property, but it does not profess that the title is valid nor does it contain any warranty or covenants of title. A quitclaim deed merely passes whatever interest the seller has in the real property, if any.

If you have questions about what you are warranting or what is being warranted to you in a transaction, do yourself a favor and consult an experienced Texas real estate attorney.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.