Ok, yes I am a nerd, and this article may not have widespread appeal, but I think it has some novel and not well-known information that even if never needed or used you will hopefully at least find interesting. The subject is “Quit Claim Deeds.” First things first, it is not and never has been a “Quick Claim Deed.” This term may have arisen, because people thought I just need a quick deed, and this was consider a quick easy solution. Anyway, not sure when people began using that phrasing or at least hearing it, repeating it, and never being corrected, but here is your correction – It’s called a QUIT Claim Deed.
Should I use a Deed Without Warranty
Now that we got that straightened out, it really should not matter, because you should really never use one. If you find yourself in the situation where you need a conveyance to transfer property or have someone convey property to you, and you do not want to warrant (guarantee) any title ownership then a Deed Without Warranty should be used.
I have received calls where somebody says to me, “The bank says I need a quitclaim from my ex-wife before they can refinance my home loan.” He needs a deed, but a quitclaim would not be recommended, and could in fact create potential problems later. A quitclaim deed conveys whatever interest the Grantor has in the property, if there really is any interest, and may not be a deed with any effect at all depending on the existence of other deeds. To make things worse title companies generally in Texas completely disregard them, and treat them as having conveyed nothing when it comes to insuring title. That is one reason why ultimately a quitclaim deed could have no real effect, because if a title company will not insure title received through one then it will be tough to convey that title for any real or significant value.
Know the Texas Property Code
The problem is created by a section in the Texas Property Code known as the Validity of Unrecorded Instrument, found at Texas Property Code § 13.001. The code gives protection to bona purchaser for value against an unrecorded conveyance. The code does not however protect a purchaser that did not give value or consideration. The code goes on to state specifically, “unrecorded instrument is binding on a party to the instrument, on the parties heirs, and on a subsequent purchaser who does not pay a valuable consideration or who has notice of the instrument.” Generally, quitclaim deeds do not include consideration or any terms relating to value given for the transfer of property. Using a standard form quitclaim deed could leave you holding an interest in property that you cannot convey for any real value, because title companies will disregard the quitclaim deed.
Another problem with quitclaim deeds, especially if you just pull a form and fill in the blanks may be that the words of grant may only state, “remise, release, and quitclaim” instead of “grant, sell, and convey.” Texas cases have found that “remise, release, and quitclaim” are sufficient to convey whatever interest the Grantor held. Diversified, Inc. v. Hall, 23 S.W.3d 403 (Tex. App.– Houston [1st Dist.] 2000, pet. denied). However, best practices would be to not use a quitclaim deed that may not include the typical words of grant – “grant, sell, and convey.”
The title on the top of the deed is not the important part, and really has no bearing on the type of deed. What matters are the terms in the deed, and what is actually being conveyed and how, as in for consideration (value).
It is important to get the right deed drafted, and never assume if someone tells you that you just need a quitclaim deed, because you may end up with not much of anything at all. It is generally no cheaper to get an attorney to draft a quitclaim deed than a warranty deed; the important thing is to meet with competent legal representation that will make sure you get the correct deed.
At Guerra Days Law Group we not only can draft whatever deed you want, but also help identify the right deed to protect your interest and rights as a seller or guarantee the interest you are paying for as a buyer is included in your conveyance.
-Written by Brent Smith (Partner at Guerra Days Law Group)