Buying real estate is a big move. It can grow your business, secure your future, and build your legacy. But before the keys hit your hand, there’s one important detail you shouldn’t overlook: the type of deed you’re acquiring.
In Texas, there are several types of real estate deeds. Each has a different level of protection, responsibility, and purpose. If you’re a business owner thinking about buying property or simply trying to understand what type of deed is best for your situation, you’re in the right place. In this post, we walk you through five common types of deeds in Texas—and when to use them.
And if you’re a business owner ready for a real estate transaction, The Vastine Law Firm, PLLC, can provide top-tier representation to help you manage property and business interests at the highest levels.
Now, let’s talk about some of your options.
What Are the Types of Deeds in Texas?
Though Texas law recognizes five types of deeds, people often ask, “What are the four types of deeds?” These individuals are typically referring to:
- General warranty deeds,
- Special warranty deeds,
- Quitclaim deeds, and
- Deeds without warranty.
In addition, Texas law also recognizes co-tenancy deeds. These different forms of deeds provide varying levels of protection in real estate transactions, and depending on your needs, you might prefer one deed over another.
This guide focuses on five deeds that often appear in real estate transactions, estate planning, and business purchases. Each plays a unique role in protecting your property interests—or passing them on.
1. General Warranty Deed
A general warranty deed gives the buyer the highest level of protection. It promises that the seller owns the property free and clear and will stand behind that promise, even if problems stemming from before they owned it arise.
You may want a general warranty deed when:
- You want full legal protection from title issues,
- You plan to own the real estate for a long time,
- The resale value of the property is important to you, or
- You’re investing significant capital in the property.
This deed covers the entire chain of title, not just the time the seller owned it. It’s essentially the gold standard for clean real estate transactions.
2. Special Warranty Deed
A special warranty deed offers some protection, though not as much as a general warranty deed. So, what are the differences between a special warranty deed vs. a general warranty deed?
General warranty deeds cover all past owners, while special warranty deeds only cover the seller’s period of ownership. The seller guarantees that it will defend the buyer against claims that arise through the seller, but it makes no promises about claims from previous owners.
You might want a special warranty deed when:
- You trust the seller and have limited capital to invest,
- You are a seller who wants limited liability, or
- You’re not interested in the resale or long-term value of the property.
A special warranty deed transaction is riskier. Reserve this type of transaction for purchasing real estate that is not integral to the operation of your business, such as a plot for storage of equipment or materials you rarely use.
3. Quitclaim Deed
A quitclaim deed is not quite a deed, but is more of a grantor’s release of any claims they have to or against the property. It makes no promises or guarantees and offers virtually no protection to the buyer. The deed just passes whatever interest the grantor has in the property. This is one of the riskiest types of deeds in Texas, and it’s not usually used in traditional sales.
You might use a quitclaim deed:
- To clear up title issues between family members or business partners,
- To remove a person’s name from a deed (like in divorce situations), or
- To gift property.
Quitclaim deeds are quick and easy, but can come with major legal risks if not used carefully.
4. Transfer on Death Deed
A transfer on death deed lets a property owner name a beneficiary to receive the property when they die without going through probate. It doesn’t transfer ownership right away, as it only becomes effective after death. Also, this deed can be revoked or changed while the owner is still alive.
Transfer on dead deeds are often used:
- For estate planning;
- To pass property to affiliates, children, or a spouse; or
- To avoid probate without forming a trust.
If you are the grantee under this type of deed, you likely don’t want to depend on the property as a source of capital or a site for major operations.
5. Co-Tenancy Deeds
Co-tenancy deeds typically come in two flavors: tenancy in common and joint tenancy with right of survivorship.
These deeds are used when two or more people own property together. And the type of co-tenancy affects what happens when one owner dies.
Tenancy in Common (TIC)
In a TIC deed:
- Each owner owns a specific percentage of the property; and
- Their share goes to heirs, not the other owner(s), upon an owner’s death;
These types of tenancies can be common in business partnerships or investment properties, but they can get messy when an owner dies.
Joint Tenancy with Right of Survivorship (JTWS):
Under this type of deed:
- A deceased owner’s share automatically passes to the surviving owner, and
- No probate is needed.
Spouses often use this type of deed, but business partners and affiliates can use it as well. To establish JTWS rights, the deed must explicitly mention survivorship. We can help you craft a deed to ensure these rights and your business succession plans are clear.
Who Has the Deed to My House If I Have a Mortgage?
Here’s a common question: “Who has the deed to my house if I have a mortgage?” The answer is you do, but the lender has certain rights.
Your name is on the deed even if you’re still paying off your mortgage. The lender has a lien on the property reflected in a deed of trust. This means a couple of things:
- You can’t sell the property without paying off the loan, and
- The lender’s deed of trust gives them the right to sell your real estate in a foreclosure sale.
We can help you negotiate and review lending agreements that protect your interests and fulfill your needs.
Contact The Vastine Law Firm Today
At The Vastine Law Firm, our highly experienced team helps Texas business owners make informed real estate decisions. From deed preparation to full purchase agreements, we’ve got your back. If you’re buying or selling property, or you just want to make sure your deed is doing what it should, call us or contact us online today.
Resources:
- Effect of Transfer on Death Deed During Transferor’s Life, Tex. Estate Code § 114.01 (2015), link.
- Transfer on Death Deed Revocable, Tex. Estate Code § 114.052 (2015), link.
- Texas State Law Library, “Wills & Directives: Transfer Property after Death,” link.
- Texas Real Estate Center, Famgrough, Judon, “A Homeowner’s Rights Under Foreclosure” (Nov. 2009), p. 1, link.
