Quitclaim Deeds vs. Warranty Deeds in Texas
Quitclaim Deeds vs. Warranty Deeds in Texas
There are several types of deeds people use to transfer property in Texas. While all of these deeds are valid in Texas, this doesn't mean real estate attorneys favor them.
In fact, while quitclaim deeds are valid, they're not often used in Texas because they're barely considered deeds at all. Many Texas attorneys will tell their clients not to use quitclaim deeds, and most Texas title insurance companies don't like them if a prior owner used one at some point in time. Some attorneys refer to quitclaim deeds as hardly a deed, or useless, and say there are better ways to convey, or transfer, property.
Many states allow quitclaim deeds between close relatives and spouses, because relatives and spouses generally know whether the title is good or not, and because these are relationships where there is a fair amount of trust. Texas still discourages its residents from using quitclaim deeds, even for these transactions.
Types of Deeds in Texas
There are four major types of deeds in Texas. There are others, but these are the most common. They include:
- General warranty deeds
- Special warranty deeds
- Deeds without warranty
- Quitclaim deeds
Texas General Warranty Deeds
The most common type of deed used in Texas is a general warranty deed. This type of deed guarantees the title comes without any liens, easements, or other title problems. A general warranty deed also assures the buyer that there will be no issues with the title. The seller guarantees or warrants that they have full title to the property and that they're allowed to transfer it to the buyer. Warranty deeds give more protection to the buyer than any other type of deed.
Texas Special Warranty Deeds
A special warranty deed doesn't provide as much protection as a general warranty deed, but it's still used in certain situations. With a special warranty deed, the seller doesn't warrant the title is free and clear of defects from the beginning of time to the present. The seller only warrants the title is good from the time they acquired the property to the present time.
The seller, with a special warranty deed, is guaranteeing they haven't done anything to cause a problem with the title during the time they've owned the property, such as adding liens or easements to the property. Still, under a special warranty deed, the seller is not guaranteeing or warranting that someone else hasn't done something to create a defective title in the time before the seller owned the property.
It's clear, then, that buyers are more protected by general warranty deeds than by special warranty deeds. While sellers would likely prefer to use special warranty deeds if they could, buyers are better off using a general warranty deed.
Texas Deeds Without Warranty
A Texas deed without warranty isn't used often, except in situations where a quitclaim deed might otherwise be used, because people avoid using quitclaim deeds in Texas. Plus, a deed without warranty doesn't protect a buyer, because it provides no warranties that the title is good.
While the deed without warranty sells and conveys the property to the buyer, it's only slightly better than a quitclaim deed. It conveys title to the buyer, but there's no warranty against any defects in the title. Thus, a buyer can't sue a seller who used a deed without warranty for any defect in title that appears later on. Because of the lack of warranties, many attorneys will recommend that, if you're the buyer, you should avoid this type of deed.
Texas Quitclaim Deeds
Texas is one of the few states where insurance companies and attorneys freely admit they don't like using quitclaim deeds. In fact, while online service providers prepare all kinds of deeds for customers, at least one such site states in a product footnote that it does not prepare quitclaim deeds in two states, one of them being Texas, and that it prepares warranty deeds for Texas customers instead.
A quitclaim deed in Texas isn't as useful as it is in other states. That's because the deed without warranty is an alternative in Texas, while other states don't have this option. The deed without warranty is used either by a person without an attorney or when an attorney cannot convince their client to get a warranty deed. While a deed without warranty is not recommended by attorneys because of the lack of warranties provided, it does transfer the property, even though it's without a guarantee that the title is good.
A quitclaim deed only transfers whatever interest in the property the seller has, and there's nothing stating that the seller has good title. Indeed, if you consult a real estate attorney in Texas and ask for a quitclaim deed, there's a good chance they're going to talk you out of using either a quitclaim deed or a deed without warranty. Most Texas real estate attorneys feel the quitclaim deed and the deed without warranty, although better than the quitclaim, don't adequately protect their clients.
Other Uses for Quitclaim Deeds in Texas
Buyers use quitclaim deeds in Texas only in certain circumstances. One example is when there's a gift between family members or close friends. If you're the buyer, or receiver of the gift, don't accept a quitclaim deed unless you truly know the seller and trust them. Otherwise, you could be receiving a worthless piece of paper.
The only other times people use quitclaim deeds in Texas are when there's a divorce and one of the former spouses quitclaims their interest in the property to the other spouse, or where someone adds a new spouse to a deed. However, even in these situations, many former and current spouses use a deed without warranty instead of a Texas quitclaim deed. That doesn't mean you can't use a quitclaim deed, but it's preferable to use a deed without warranty, even in these situations. A buyer or seller doesn't even have to record a deed in Texas to make it effective.
When deciding which type of deed to use, consider the advice of most Texas attorneys, who steer their clients away from quitclaim deeds to other types of deeds. A warranty deed gives the best protection for the buyer, and a special warranty deed is also worth considering if you're not worried about the seller's title. All in all, if you're the buyer, you have options when it comes to choosing a deed to transfer property in Texas. Use the deed, such as a general warranty deed, that will provide you with the most protection.