Attorney and Retired Judge Craig Estlinbaum describes quitclaim deeds, and he discusses a new statute of limitations affecting quitclaim deeds in the chain of title. Call or text 800-929-1725 for an appointment at any of our five offices.
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Summary of Quitclaim Deeds in Texas
My name is Craig Estlinbaum. I’m one of the attorneys at Wadler, Perches, Hundl, and Kerlick. (Judge Estlinbaum is no longer with the firm.) We have offices in Wharton, Bay City, Richmond, El Campo, and Fulshear to serve you.
Four Types of Deeds to Convey Property
Today’s topic is quitclaim deeds. In Texas, buying, selling, acquiring, or gifting real estate looks simple on the surface but can be very complex and filled with traps for the unwary. When property is formally conveyed, four types of deeds can be prepared to evidence the conveyance. These are the general warranty deed, the special warranty deed, the deed without warranty, and the quitclaim deed, which is called a deed, but it’s really a deed in name only.
Two vital elements in any deed would include the granting language and the warranty, if there is one. The granting language explains what property is conveyed, usually fee simple title, subject to a reservation or an exception.
A reservation might be something like a life estate or a mineral interest. That’s something that the grantor or the seller retains to themselves as part of the transaction. The exceptions to the title might be a right of way easem*nt, a utility easem*nt, an oil and gas lease, or some other restriction on the total fee simple use of the property.
The general warranty deed is a deed that warrants the title to the buyer from the inception of the title. So in cases where a general warranty deed is used, the warranty is good back to the origination of title. In the case of a special warranty deed, the warranty is good only against claims against title that occurred during the ownership period of the grantor. And in the case of a deed without warranty, that document includes the granting language but does not warrant the title at all to the buyer.
What Is a Quitclaim Deed
A quitclaim deed is not a deed at all. It is merely a document that transfers whatever title may exist in the grantor to a grantee. It doesn’t grant any title. It’s more in the form of an estoppel than a deed. So a quitclaim deed is an instrument that denies ownership of the property at stake.
So a quitclaim deed becomes then a form of estoppel, not an affirmative grant of the real property. Quitclaim deeds in a chain of title can create problems for a property owner or a seller because the quitclaim deed may prevent the property from being insurable. This is because Texas law provides that an unrecorded instrument is binding against a subsequent purchaser who does not pay valuable consideration for the property. And often, a quitclaim deed does not include the transfer of valuable consideration in exchange for the deed.
So under that rule, a person who believed she acquired a property in 2010 by a quitclaim deed may find that title impaired or limited because later after the transaction, an instrument from 2005, which was unknown to the buyer and maybe to the seller, comes up into the chain of title. And this is because, again, under Texas law, a buyer without consideration is not protected. And for this reason, title insurance companies are often reluctant or have outright refused to insure title where a quitclaim deed is part of the chain of title.
New Statute of Limitations Affecting Quitclaim Deeds
In September 2021, a new law Senate Bill 885 came into effect that provides for quitclaim deeds filed after September 1st, 2021. There is a four-year statute of limitations for a prior deed to come into the chain of title and take effect. However, this law only relates to quitclaim deeds filed after September 1st, 2021.
It is critically important to know the title history of the property that you are buying. And it’s also important to use the correct deeds to convey title consistent with the goals of the contract or the expectations of the parties. Sometimes title issues from past conveyances may require attention, so the title going forward will be insurable.
Get the Help You Need in Real Estate and Property Transactions
If you have any title issues or considering buying, selling, or gifting, or otherwise conveying real property, we will be happy to assist you in closing the transaction in such a way that minimizes your risk and achieves your goals. Thank you.
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I'm Craig Estlinbaum, an attorney with Wadler, Perches, Hundl, and Kerlick, specializing in real estate law. With years of experience and a deep understanding of property transactions, I aim to shed light on the complexities surrounding quitclaim deeds, especially in the context of recent legal developments.
Quitclaim Deeds in Texas: A Comprehensive Overview
In Texas, the conveyance of real estate involves intricate processes, and among the various types of deeds, the quitclaim deed stands out. I've witnessed firsthand the challenges individuals face in understanding and utilizing these instruments effectively.
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Four Types of Deeds:
- General Warranty Deed: Guarantees title from its origin.
- Special Warranty Deed: Guarantees title only against claims during the grantor's ownership.
- Deed Without Warranty: Provides the granting language but doesn't warrant the title.
- Quitclaim Deed: Often considered a misnomer, as it transfers whatever title exists without providing any warranty.
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Vital Elements in Deeds:
- Granting Language: Describes the property conveyed, usually as fee simple title, with potential reservations or exceptions.
- Warranty: Varies among deed types, offering different levels of protection to the buyer.
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Quitclaim Deed as Estoppel:
- A quitclaim deed is more of an estoppel than a traditional deed, denying ownership rather than affirmatively granting it.
- Issues arise when quitclaim deeds are part of a property's chain of title, potentially rendering the property uninsurable.
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Title Insurance Challenges:
- Texas law holds that unrecorded instruments are binding on subsequent purchasers without valuable consideration.
- Quitclaim deeds, often lacking consideration, can lead to title insurance challenges, as buyers may find their title impaired or limited.
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New Statute of Limitations (Senate Bill 885, September 2021):
- Imposes a four-year statute of limitations on quitclaim deeds filed after September 1, 2021.
- Aims to address issues where older deeds surface in the chain of title, offering a degree of protection to subsequent buyers.
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Importance of Title History:
- Knowing the title history is crucial when dealing with real estate transactions.
- Correctly using deeds consistent with contractual goals or parties' expectations is essential.
In conclusion, navigating the complexities of real estate transactions, especially with quitclaim deeds involved, requires careful consideration of the legal landscape. The recent statute of limitations underscores the need for vigilance in understanding the title history and using appropriate deeds.
If you are grappling with title issues or contemplating property transactions, our team is ready to provide the assistance needed to minimize risks and achieve your goals. Contact us at 800-929-1725 for personalized appointments, available in-person, online, or by phone.
