In our last article, we discussed the four most common types of deeds in Texas. They are general warranty deeds, special warranty deeds, quitclaim deeds, and deeds without warranty. In this first installment of a two-part series, we will go over various types of specialized deeds, each with its specific purposes, requirements, and benefits.
Cemetery Plot Deed
A Cemetery Plot Deed is a specialized instrument used to convey the right of use for a burial plot within a cemetery. This deed is typically simple but must be compliant with state and local regulations governing cemeteries. Usually, it includes a description of the burial plot, the grantor (usually the cemetery association), and the grantee (the purchaser or assignee).
Correction Instrument
Sometimes errors occur in the drafting or recording of deeds—be it misspelled names, incorrect legal descriptions, or other errors. A Correction Instrument addresses these inaccuracies by amending the original document. The Correction Instrument should refer explicitly to the original deed and clearly specify the errors being corrected. There are specific requirements on the form of the Correction Instrument and who must sign depending on whether an error was material or not.
Dedication Deed
A Dedication Deed is used by property owners (often developers) to donate land for public use, such as parks or roads. This deed serves as a formal method of transferring property to a governmental body. It usually contains a statement indicating the owner’s intent to dedicate the land for public use and may involve various regulatory approvals.
Deed in Lieu of Foreclosure
This type of deed allows a borrower facing foreclosure to voluntarily transfer the ownership of the property back to the lender to satisfy a loan that is in default. Sometimes a Deed in Lieu of Foreclosure may be useful in making the best out of a difficult situation by providing an alternative to foreclosure.
Deed of Trust
A Deed of Trust is not technically a deed for transferring property ownership. Instead, it creates a lien on real estate to secure a loan (a mortgage). If the borrower defaults, the trustee may sell the property to satisfy the debt, following the procedures for foreclosure set forth in Texas law and the Deed of Trust.
Fiduciary or Representative Deed (e.g., Executor’s Deed)
In certain situations, property must be transferred through a fiduciary, such as an executor of an estate, a trustee of a trust, or a guardian of a minor. An Executor’s Deed, for instance, is used to transfer property from an estate to an heir or buyer, pursuant to a will or court order. This specialized deed typically outlines the fiduciary’s authority and any limitations imposed by law or a governing document.
Gift Deed
A Gift Deed is a deed used to transfer property ownership without monetary exchange, typically among family members. While a Gift Deed is a simpler mechanism for property transfer, it still needs to meet all legal requirements for a valid deed in Texas. Importantly, the deed should clearly state that the transfer is a gift and not a sale, to avoid misunderstandings and potential tax implications.
Lady Bird Deed (Enhanced Life Estate Deed)
A Lady Bird Deed, often called an Enhanced Life Estate Deed, is a unique way to transfer property after death without going through probate. The deed allows the property owner to maintain full control during their lifetime — meaning they can sell, lease, or mortgage the property at will, without out joinder of a beneficiary. Upon their death, the property automatically passes to a named beneficiary. This deed is often used in Medicaid asset protection, but is becoming a common alternative to Transfer-on-Death Deeds for the reasons mentioned above.
Transfer-on-Death Deed
The Transfer-on-Death Deed is another tool to sidestep the probate process. Similar to the Lady Bird Deed, it allows a property owner to name a beneficiary who will automatically inherit the property upon the owner’s death. However, unlike the Lady Bird Deed, the owner can’t sell or mortgage the property without the beneficiary’s consent.
Mineral Deed
Unlike a lease, where the right to extract the oil, gas, or minerals is granted for period of time, a Mineral Deed transfers ownership of the oil, gas, or minerals to the buyer. It’s a way to sell off mineral rights while retaining ownership of the surface of the land itself.
Partition Deed
When multiple people co-own a property and wish to divide it into individual portions, a Partition Deed comes into play. This deed divides the property in a way that each owner gets a separate, distinct piece of the land. It’s a handy tool for family members who have inherited property or investment groups who initially bought property together, who later decide to split up the property.
Owelty Deed
An Owelty Deed is a type of partition deed that allows a co-owner buying another co-owner’s interest to mortgage the buying co-owner’s interest in homestead property. It is used where the buying co-owner is borrowing money to purchase another co-owner’s interest. It is sometimes used in divorces or in connection with inherited property.
Sheriff’s Deed
Nobody wants to face a forced sale of property to pay a lawsuit judgment, but if it happens, you might encounter a Sheriff’s Deed. When a judgment lien on non-homestead property is foreclosed upon, this deed transfers ownership from the original owner to the highest bidder at a sheriff’s sale.
Tax Deed
Falling behind on property taxes can lead to a Tax Deed, a deed that transfers ownership of a property to a new owner when the original owner fails to pay property taxes. This deed is used after a public auction where the property is sold to the highest bidder.
General Warranty Deed
A General Warranty Deed offers the most comprehensive protection to the buyer. It assures that the seller has legal title to the property and defends against any past, present, or future claims on the property. Think of it as the “gold standard” of deeds in Texas.
Special Warranty Deed
A Special Warranty Deed is like a “limited warranty” version of the General Warranty Deed. A Special Warranty Deed offers protection, but only against title issues arising during the seller's ownership. It doesn't cover issues that might have arisen before the seller owned the property.
General Warranty Deeds and Special Warranty deeds are the most common deeds used in Texas real estate transactions.
Quitclaim Deed
A Quitclaim Deed conveys any interest the seller may have in the property to the buyer, but it does not guarantee the quality of that interest. A Quitclaim deed conveys title if the seller owns title. If the seller does not own title to the property, a Quitclaim deed does not convey anything. In effect, a Quitclaim Deed acts as a disclaimer by the seller, stating, “I'm giving you any claim I might have to this property, but I make no assurances about its title status.” Generally, title companies will not accept them as part of a real estate transaction they are handling. Except for limited circumstances, a Quitclaim Deed should not be used in a Texas real estate transaction.
Deed Without Warranty
In a Deed Without Warranty, the seller doesn't provide any guarantees about the property's title. These deeds are used when the seller wants to transfer ownership without taking on any liability for potential title problems.
Understanding the different types of deeds used in Texas is essential for anyone involved in real estate transactions. Whether you're buying or selling property, knowing which deed is appropriate can help protect your interests. In future articles we will discuss these deeds in more detail and other specialized types of deeds.
