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.
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 easement, a utility easement, 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.
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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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