Texas Special Warranty Deed Form
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What Is a Texas Special Warranty Deed Form?
A Texas special warranty deed form is a type of deed that transfers Texas real estate with a limited warranty of title. The warranty of title is limited because it only covers the period when the prior owner (the person signing the deed) owned the property. A person who signs a Texas special warranty deed (the deed’s grantor) guarantees that he or she has done nothing that would cause problems to the property’s title. The signer but makes no promises about anything that may or may not have happened before he or she owned the property.
What Is Warranty of Title?
Warranty of title is a legal promise included in some deeds. The property owner making the transfer guarantees the new owner that the deed will transfer good title to the property.1 The person transferring the property agrees to cover the new owner’s financial loss if there is a problem with the property’s title. Thus, a deed that provides a warranty of title protects the new owner by placing the financial risk of title problems on the transferor.
The warranty that a Texas special warranty deed provides does not cover every potential problem with the property’s title. Instead, it covers only problems that arose while the transferor owned the property—protecting the new owner against issues that the transferor caused or allowed to occur.2
Other Names for a Texas Special Warranty Deed Form
Deeds that provide a limited warranty of title are called different things in different states. Texas and the majority of other states use the term special warranty deed. Several other states use the name limited warranty deed.3
There are a few other synonyms used in only one or two states. Alabama, for example, calls a deed with a limited warranty of title a statutory warranty deed. California uses the name grant deed, and Michigan uses covenant deed. These differing terms refer to the same basic type of deed—though there can be subtle variations in how states interpret the limited warranty.
How Do Texas Special Warranty Deed Forms Relate to Other Forms of Deeds?
The defining feature of a Texas special warranty deed is the limited warranty of title it provides. It protects the new owner from some (but not all) potential title problems—splitting the risk between the person signing the deed and the new owner. Texas recognizes other types of deeds that treat the risk of title problems differently. The type of warranty a deed provides can have legal consequences if a title issue arises.
Texas Warranty Deed Form
The name special warranty deed distinguishes a deed from a general warranty deed—usually called simply a warranty deed. A Texas warranty deed transfers Texas real estate with a complete warranty of title (a general warranty). The complete warranty of title that a warranty deed provides covers the property’s entire chain of title—protecting against title problems caused by the transferor or any prior owners.4 A Texas property owner who signs a warranty deed form bears the risk for all title issues that are not specifically excluded by the deed.
Texas Quitclaim Deed Form and Deed without Warranty
Texas recognizes two deed forms that transfer property with no warranty of title: Texas quitclaim deeds and Texas deeds without warranty. There is a subtle distinction between Texas quitclaim deeds and deeds without warranty that makes deeds without warranty more common.5 With either type, the new owner bears all the risk of title problems and receives less protection than is provided by a special warranty deed.
Example. Harris sold property to Travis. Travis later transferred the property to Hidalgo by special warranty deed. Hidalgo learned after acquiring the property 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 actually own the property that he attempted to transfer to Travis.
Because Travis transferred the property to Hidalgo by special warranty deed, Travis made no guarantees about what may have happened before Travis acquired the property. This means that Hidalgo cannot assert a breach of warranty claim against Travis based on Harris’s prior sale of the property—because the limited warranty Travis gave Hidalgo does not cover Harris’s actions. Had Travis transferred the property to Hidalgo using a warranty deed (instead of a special warranty deed), Hidalgo could have sued Travis for breaching the warranty.
Texas Title Insurance and Special Warranty Deeds
The parties to a special warranty deed split the risk that there may be problems with the property’s title. In Texas real estate sales, title insurance is usually purchased to supplement the warranty provided by a special warranty deed.
The buyer, seller, or a third-party lender can purchase title insurance to shift the risk of title problems to an insurance company. A title policy covers financial loss that a property owner (or another insured person) incurs due to a problem with the property’s title.6 A title insurance policy might cover financial loss caused by (for example) an unknown lien or mortgage, a boundary dispute with a neighboring property, or a gap in the property’s chain of title.
Texas Special Warranty Deed Forms and Other Texas Deeds Used in Estate Planning
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). Other forms of deeds are defined by their probate avoidance characteristics.
Texas recognizes three deeds that an owner can use to keep property out of probate:
- Texas life estate deed. A Texas life estate deed gives the current owner (the life tenant) the right to own the property until his or her death. The deed gives another person (the remainder beneficiary) the right to own the property in the future when the life tenant dies. An owner who records a life estate deed cannot sell or transfer complete ownership of the property unless the remainder beneficiary agrees.
- Texas lady bird deed. A Texas lady bird deed—formally called an enhanced life estate deed—works like a standard life estate deed but with an important difference: The current owner reserves enhanced control over the property. The greater control allows the owner to sell or mortgage the property (among other rights) without the remainder beneficiary’s consent.
- Texas transfer-on-death (TOD) deed. A Texas transfer-on-death deed—or TOD deed—names a beneficiary who automatically takes title when the current owner dies.7 A TOD deed has no legal effect until the owner dies, so the owner keeps the right to sell the property or revoke the TOD deed for as long as he or she is still alive.
Each of these deeds is named for its estate-planning function—not for its warranty of title. Because deed names can be based on different features, two names might potentially apply to the same deed. For example, a Texas lady bird deed may also be a Texas special warranty deed, or a life estate deed may also be a deed without warranty.
Common Uses of Texas Special Warranty Deed Forms
Special warranty deeds can be used in any situation where the person signing the deed is willing to provide a warranty of title that covers his or her own actions, but cannot or will not make any guarantees about previous owners. Texas special warranty deeds are often appropriate when a 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 sales.
An owner often uses a special warranty deed to adjust a property’s legal title when actual possession and control of the property will not change. A transfer from the current owner to a living trust or an LLC that the current owner controls often involves a special warranty deed, as it helps preserve title insurance protections.
How to Create a Texas Special Warranty Deed
Texas has a sample statutory form that creates a general warranty deed, but that the parties can modify by inserting additional clauses.8 The statutory form provides a good starting point to create a Texas special warranty deed.
Creating a Special Warranty Deed
The statutory deed form’s granting clause uses the phrase grant, sell, and convey—which creates an implied warranty under Texas law.9 A person creating a special warranty deed can then include specific language to limit the deed’s warranty to the period when the person signing the deed owned the property.10
Texas General Deed Requirements
Along with a suitable granting clause and warranty language, a Texas special warranty deed must meet all of the other requirements that apply to all Texas deeds. These requirements include:
- A valid legal description;
- A statement of consideration, and
- A description of the co-ownership form the new owners will use (if there is more than one).
Texas deeds must also conform to Texas’ formatting standards that control issues like font size, page format, page margins, and a notice of confidentiality rights. The transferor must sign the deed, and it must be notarized as required by Texas law.
Selecting a Texas Special Warranty Deed Form
A Texas special warranty deed form must be prepared to meet all legal requirements and transfer the title with the right warranty. Minor differences in language can have significant legal consequences, and a special warranty deed form that works well in another state may be ineffective in Texas.
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- Chi. Title Ins. Co. v. Cochran Invs., 602 S.W.3d 895 (Tex. 2020).
- Paul v. Houston Oil Co. of Texas, 211 S.W.2d 345 (Tex. Civ. App. 1948).
- See, e.g., Ohio Rev. Code §5302.07.
- Dyer v. Cotton, 333 S.W.3d 703 (Tex. App. 2010).
- Pounds v. Jurgens, 296 S.W.3d 100 (Tex. App. 2009).
- Tex. Ins. Code § 2501.003(12).
- Tex. Est. Code § 114.051.
- Tex. Prop. Code § 5.022.
- Tex. Prop. Code § 5.023.
- Tex. Prop. Code § 5.022(c).