A Primer on Texas Deeds
There are four types of Texas deeds: general warranty deeds, special warranty deeds, deeds without warranty and quitclaim deeds; or, perhaps I should say there are three types of deeds and one imposter posing as a deed – the quitclaim deed.
A deed is the legal instrument used to convey title to real estate. It may or may not contain a warranty or guaranty of the title conveyed. Let’s review the various deeds, including the quitclaim deed.
A quitclaim is not technically a deed. A deed actually conveys property. A quitclaim conveys only the grantor's interest in the property rather than the property itself. Use of a quitclaim implies that the grantor does not have "good" title to the property. Quitclaims should not be used when the person conveying title (lawyers refer to this person as a “grantor”) actually "owns" the property and intends to transfer the title to someone else (a “grantee”).
Title companies will usually not insure title when there is a quitclaim in the recent chain of title. This severely limits the usefulness of a quitclaim since most title transfers require title insurance. Quitclaim deeds suffer from several other legal impediments which are rather technical and are unnecessary for you to understand to realize that quitclaims should be used only in very limited circumstances and with the advice of a competent real estate lawyer. DO NOT USE A QUITCLAIM DEED FORM YOU FOUND ON THE INTERNET.
Deed Without Warranty.
A deed with no warranty differs from a quitclaim because it conveys property, and not just the grantor's interest in the property. It is not burdened with the implication of grantor's "non-ownership" of the property. However, even though a deed without warranty conveys property, the grantor does not warrant or guarantee the quality of title being conveyed.
This deed is most commonly used when a seller is unsure of title to property but will convey whatever title he or she has. For instance, assume a seller has a deed to Lot 1 Jones Addition and is selling the property to a buyer. Further assume that several years back the city abandoned an alley behind Lot 1. Under Texas law, when the alley was abandoned, title from Lot 1 to the middle of the alley would transfer to the owner of Lot 1. The owner on the other side of the alley would be entitled to the other half of the alley. The seller does not have a deed to the alley property but she is willing to convey her interest in the property to the buyer. She will just not warrant or guarantee the title. The alley property would be conveyed to the buyer with a deed without warranty. If there is any future challenge to the legitimacy of title to the alley property, the seller would not be responsible.
Special Warranty Deed.
A special warranty deed is the first deed we have discussed which contains a warranty or guaranty of title. When a seller “warrants” the title being conveyed he or she guarantees that the title conveyed is without any adverse claims or defects, except for any matters in the deed itself. There are two basic warranties of title; a general warranty and a special warranty.
A special warranty deed differs from a general warranty deed in that the grantor warrants only that there are no title defects, liens, encumbrances or claims created by the grantor. There is no warranty against defects resulting from the act of someone who owned the property before the grantor.
To illustrate this, suppose you give a buyer a special warranty deed. Later it is determined that the party you purchased from had a judgment lien against the property when he sold to you. When you give a special warranty, you are guaranteeing only that you did nothing to adversely affect the title, so your special warranty would not make you liable for the title defect created by the prior owner.
General Warranty Deed.
With a general warranty deed, the seller (grantor of the deed) expressly warrants the entire chain of title to the property all the way back to the sovereign entity which originally granted title to the real estate. It obligates the grantor to defend against title defects, even if those defects were created before the grantor's period of ownership.
Using the above hypothetical, if the seller gave the buyer a general warranty deed, the seller would be liable for the title defect cause by the judgment lien against the prior owner.
When a seller gives a general warranty, he or she is warranting there are no title defects between the title originally granted by Spain, Mexico, or the Republic of Texas and the present-day title.
When you sign a contract to buy or sell property, the contract will specify the deed to be used. By referring to the foregoing discussion, you should have a least a rudimentary understanding of the different deeds. Please consult your lawyer for a complete understanding and before relying on any information in this article.