How a Texas Special Warranty Deed Form Works
A Texas special warranty deed form is a type of deed used to transfer Texas real estate with a limited warranty of title. The warranty of title provided by a Texas special warranty deed form is limited in the sense that it only covers the period when the prior owner (the person signing the deed) owned the property. When the prior owner signs the special warranty deed, he or she guarantees that he or she has done nothing that would cause title problems, but makes no promises about what may have happened before he or she owned the property.
Other Names for Texas Special Warranty Deeds
Deeds that provide a limited warranty of title are called different things in different states. In Texas and most other states, the term special warranty deed is used. But other states differ. In Alabama, for example, a deed that provides a limited warranty of title is called a statutory warranty deed. In California, it is called a grant deed. In Michigan, it is called a covenant deed. And in other states, it is called a limited warranty deed. Although these terms all differ, they all refer to the same type of deed.
Designating a deed as a special warranty deed distinguishes it from a general warranty deed (usually referred to simply as a warranty deed). As discussed below, although both special warranty deeds and general warranty deeds use the phrase warranty deed, they provide different warranties of title.
Relationship of Special Warranty Deed Form to Warranty of Title
Key Term: Warranty of Title. Title issues can be caused by many things, including errors in the public record, unknown liens against the property, undisclosed prior conveyances, forged deeds, missing heirs or unprobated wills, or disputes about boundary lines or surveys. Title issues often require legal action to fix and can decrease the value of real estate. If the property has no title issues, it is said to have clear title. A warranty of title is a legal guarantee from the transferor to the transferee that there are no title issues. If a deed makes a warranty of title, the transferee can sue the transferor over any title issues.
A special warranty deed form is defined by its limited warranty of title that applies only to the period when the prior owner that signed the deed owned the property. This limited warranty of title distinguishes special warranty deeds from other forms of deeds that are named based on the warranty of title:
- In Texas, two deeds can be used to transfer property without a warranty of title: A Texas quitclaim deed and a Texas deed without warranty. A Texas special warranty deed differs from these two deeds in that it does provide a warranty of title, though a limited one.
- A Texas warranty deed transfers Texas real estate with a full warranty of title that extends to all time, including the period before the prior owner owned the property. This warranty of title differs from the one provided by a Texas special warranty deed, which only covers the time when the prior owner owned the property.
The type of warranty provided can have legal consequences if a title issue arises.
Example: Harris sold property to Travis. Travis later transferred the property to Hidalgo by special warranty deed. After Hidalgo acquired the property, he learned that Harris (who owned the property before Travis) had already deeded the property to someone else before he sold it to Travis. As a result, Harris did not own the property that he purported to transfer to Travis.
Because Travis transferred the property to Hidalgo by special warranty deed, Harris made no guarantees about what may have happened before Travis acquired the property. As a result, Hidalgo has no breach of warranty claim against Travis for Harris’s prior actions. Had Travis transferred the property using a warranty deed (instead of a special warranty deed), Hidalgo could have sued Travis for breaching the warranty.
The deed forms discussed above—special warranty deeds, warranty deeds, quitclaim deeds, and deeds without warranty—are all defined by the warranty of title that they provide (or don’t provide). There are other forms of deeds that are defined by their probate avoidance characteristics. In Texas, three deeds can be used to avoid probate: life estate deed, lady bird deed, and transfer-on-death deed. Because these deeds are all named after a different feature than the warranty of title, the same deed could be properly called by different names. For example, a Texas lady bird deed may also be a Texas special warranty deed.
In Texas real estate sales, title insurance is usually purchased to supplement the warranty provided by a special warranty deed. Title insurance shifts risk to the insurance company by allowing the buyer to bring a claim against the insurer if a title issue is discovered.
Common Uses of Special Warranty Deeds
Special warranty deeds can be used in any situation where the person signing the deed is willing to provide a warranty of title about his or her own actions, but doesn’t want to make any guarantees about previous owners. This is usually the case when the property is owned in a fiduciary capacity, such as by a trust, estate, or a trustee in foreclosure. Special warranty deeds are also common in commercial real estate transactions.
Special warranty deeds are often used in transfers to a living trust or an LLC controlled by the person signing the deed. This can help preserve title insurance protections.
How to Create a Texas Special Warranty Deed
Section 5.022 of the Texas Property Code provides a sample form that can be used for general warranty deeds, but allows the parties to alter the deed by inserting additional clauses. In practice, this form provides a starting point for both special warranty deeds and (general) warranty deeds. The primary elements are the “grant, sell, and convey” language in the vesting paragraph and the warranty clause. To create a special warranty deed, specific language must be included to limit the warranty to the period when the person signing the deed owned the property.
In addition to the proper vesting and warranty language, a special warranty deed must contain all of the elements of other Texas deeds. These elements include a valid legal description, a statement of consideration, and a description of the manner in which co-owners will hold title. The deed must also meet the requirements of Texas law for font size and page format, including page margins, and contain the required notice of confidentiality rights. The deed must also be signed and notarized as required by Texas law.
It is important that each Texas special warranty deed is drafted to meet each requirement. Even subtle differences in language can have significant legal consequences. The special warranty deeds prepared by our Deed Generator were designed by licensed Texas attorneys to meet the requirements of Texas law and to be valid for recording in all Texas counties.