{"id":1653,"date":"2021-09-01T11:00:51","date_gmt":"2021-09-01T15:00:51","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1653"},"modified":"2024-04-25T23:19:27","modified_gmt":"2024-04-26T03:19:27","slug":"texans-welcome-new-guidance-for-quitclaim-deeds","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/texans-welcome-new-guidance-for-quitclaim-deeds\/","title":{"rendered":"Texans Welcome New Guidance for Quitclaim Deeds"},"content":{"rendered":"\n
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Adverse Possession Also Clarified<\/strong><\/em><\/p>\n\n\n\n

Congrats to Texas, where the government just gave a boost to\nthe quitclaim deed! People who receive their homes through recorded quitclaim\ndeeds will now be on firmer ground in the Lone Star State. Here\u2019s what you need\nto know. <\/p>\n\n\n\n\n\n\n\n

Strengthening the Chain of Title for Texas Property<\/strong><\/h2>\n\n\n\n
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In May, a bill was signed into law to amend Chapter 13 of the\nTexas Property Code, to take effect on Sep. 1, 2021. From now on, using a\nquitclaim deed to transfer title from one owner to the next will be easier. Title\ncompanies will be able to consider buyers who accepted and recorded quitclaims as\nbona fide purchasers<\/em> after four years. Texas formally set a four-year\nstatute of limitations for competing claims.<\/p>\n\n\n\n

Once a quitclaim deed is recorded in the property\u2019s county,\na later purchaser or lender has good-faith protection, as long as the party has\nno knowledge of other unrecorded claims on the property. What does this mean\nfor buyers of real estate with a quitclaim in the chain of title? The buyer can\nlegally claim good faith purchaser<\/em> status. <\/p>\n\n\n\n

Why the Four-Year Statute of Limitations Matters<\/strong><\/h3>\n\n\n\n

In general, the recipient of a quitclaim gets whatever the grantor\n(person transferring the document) owned \u2014 no more, no less, and with no\nguarantees expressed in the document. This means the holder of a quitclaim deed\ncannot prove title to the property by the document alone. That said, in states\nother than Texas, a rule has prevailed that a quitclaim, recorded by a buyer in\ngood faith and without knowledge of competing claims, does take precedence over\nearlier, unrecorded claims.<\/p>\n\n\n\n

In Texas, though, while a quitclaim is valid, the document flags\ndoubts about what interest the grantor had. So, a buyer taking a quitclaim deed\nwould be \u201con notice\u201d of doubts about the interest being conveyed. <\/p>\n\n\n\n

A quitclaim in the chain of title can rule out a Texas\nproperty for title insurance coverage. That\u2019s why Texans may have avoided\nquitclaims, and attorneys in Texas have generally cautioned against using them.<\/p>\n\n\n\n

What about quitclaims between related people? Homeowners\noutside of Texas often use quitclaim deeds between divorcing spouses, family\nmembers, and co-buyers. While quitclaim deeds are common in most states in such\nsituations, Texas attorneys have, even in these cases, suggested warranty deeds\ninstead.<\/p>\n\n\n\n

\u201cThe root of the problem is a single section of the Texas property code, which essentially states that unrecorded title transfers in the past are binding to subsequent purchasers,\u201d one Texas attorney<\/a> has observed, who adds that quitclaim deeds in Texas would be \u201cseen as red flags to potential buyers.\u201d<\/p>\n\n\n\n

And that negative effect would just stay in the chain of\ntitle forever. The only way to make the title insurable, and thereby market the\nhome, would be to undertake the expensive legal hassle of a quiet title action.\n<\/p>\n\n\n\n

How do owners clear a title that might be clouded by unrecorded claims? See our overview: What Is a Quiet Title Action<\/em><\/strong><\/a>?<\/strong><\/em><\/pre>\n\n\n\n
Title Industry Leads on Law<\/strong><\/h2>\n\n\n\n
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One big driver of this legal milestone was the Texas Land\nTitle Association (TLTA). Frustrated by uninsurable titles, the Association asked\nthe state to enact a quitclaim statute of limitations, so the uncertainty of a\nTexas quitclaim could, in due time, be removed from chains of title.<\/p>\n\n\n\n
The issue became continually more urgent, according to TLTA.\nThe courts have, more and more, looked at the language in property deeds and\ndetermined them to be quitclaims. Texas courts have tended to find quitclaims\nwhen spotting language that transfers the grantor\u2019s interest only. The judicial\ntrend has resulted in fuzzier title transfers, with quitclaims in chains of\ntitle where the parties had not intended to create uncertainty.<\/p>\n\n\n\n
To firm up property conveyances in Texas, TLTA pressed for\nan amendment to extend bona fide purchaser<\/em> status to later owners of formerly\nquitclaimed properties who receive them in good faith, without notice of\ncompeting, unrecorded claims of ownership. <\/p>\n\n\n\n
Wisely, TLTA put forth a specific solution. Four years after\nthe recording of a quitclaim, a lender or a potential buyer is protected, and no\nlonger deemed to have \u201cnotice\u201d of unrecorded transactions.<\/p>\n\n\n\n
Benefits of the New Texas Quitclaim Law <\/strong><\/h2>\n\n\n\n
The resulting amendment to Texas property law was SB 885. It\ndoes not constitute complete good faith protection, but it does support later\nbuyers, lenders, and title insurers by creating clear limits. Third-party\nchallenges to ownership based on quitclaim must occur in four years from the\nquitclaim\u2019s recording date, or they are time-barred. And this takes out the\nquestion marks for future buyers, lenders, and title companies that depend on\ndeed records to establish good title. <\/p>\n\n\n\n
For deeds recorded in the property\u2019s county, from September\n2021 on, here is what happens when the four years in the statute of limitations\npasses: <\/p>\n\n\n\n