Limitations of the Quitclaim Deed in Texas

With surprising frequency, Texans seeking to transfer title to real estate without the assistance of an experienced real estate lawyer utilize Quitclaim Deeds. Perhpas this is because of the wide availability of these forms on the internet, and in free databases. However, there are many pitfalls associated with using the Quitclaim Deed, and its limitations are plenty. For these reasons, quitclaim deeds are viewed with disfavor in Texas.

The essence of a quitclaim deed is an effort to pass any title, interest or claim of the grantor, but not professing that such title is valid, nor containing any warranty or covenants for title. See Porter v. Wilson, 389 S.W.2d 650, 655-56 (Tex.1965). A quitclaim deed is not a conveyance or a muniment of title. Adamson v. Doornbos, 587 S.W.2d 445, 447-48 (Tex.Civ.App.—Beaumont 1979, no writ).

By itself, a Quitclaim Deed does not establish any title in those holding the deed, but merely passes the interest of the grantor (if any) in the property. Stated simply, a Quitclaim Deed suffices only to give the grantee whatever title that grantor has. If the Grantor has no title to the property interest in question, then none passes.

More importantly, a subsequent purchaser is not a bona fide purchaser if the conveyance is made by quitclaim (conveyanvce without warranty). See Woodward v. Ortiz, 150 Tex. 75, 237 S.W.2d 286, 291-92 (1951) (purchaser of a quitclaim deed takes with notice of all defects in the title and equities of third persons); Kidwell v. Black, 104 S.W.3d 686, 691 (Tex.App.-Fort Worth 2003, pet. denied); Hall v. Tucker, 414 S.W.2d 766, 769 (Tex.Civ.App.-Eastland 1967, writ ref'd n.r.e.).

Although there is an appropriate application for quitclaim deeds in Texas, these circumstances are rare, and a General Warranty Deed or Special Warranty Deed is the preferential instrument for conveyance.

New Changes to TREC Contract Forms

The Texas Real Estate Commission took emergency action at the February 14, 2011 commission meeting to adopt revisions to standard contract forms including the Unimproved Property Contract, the One to Four Family Residential Contract (Resale), the New Home Contract (Incomplete Construction); the New Home Contract (Completed Construction); the Farm and Ranch Contract; and the Residential Condominium Contract. The effective date for the emergency action is March 1, 2011.

This action was taken based on a recommendation from the Broker Lawyer Committee. The Broker Lawyer Committee is a committee appointed by the Commission to draft and revise contract forms that are capable of being standardized to expedite real estate transactions and minimize controversy.

With this action the forms were amended to remove new sub-paragraph 15B, which was recently added to the contract forms to require a seller or buyer to file an action for specific performance within 45 days of the Closing Date of the contract. The Commission took emergency action to remove sub-paragraph 15B with an effective date of March 1, 2011. The updated contract forms are available for immediate use on the TREC website with a date of February 14, 2011 on the right-hand corner.

New Chair and Commissioners Appointed to Texas Real Estate Commission

Governor Rick Perry has made four appointments to the Texas Real Estate Commission: Broker member Avis Wukasch, currently serving as a broker member of the commission with a term to expire January 31, 2013, was appointed to serve as the Chair. Governor Perry also newly appointed broker member Bill L. Jones and public member Weston Martinez, and reappointed broker member Troy Alley, all three with terms to expire January 31, 2017.

Recovery of Attorney's Fees in Adverse Possession Cases

There is little doubt that adverse possession lawsuits can be costly. Litigants to these title disputes -- where the key evidence is necessarily historical and often pre-dates current ownership of a given property -- frequently incur substantial expense in surveys, document searches, depositions of prior owners, expert witnesses and title searches. Naturally, a real estate lawyer's time associated with weaving or undermining a credible claim for ownership which is contrary to "legal title" as it appears in the deed records can also translate into significant attorneys' fees. Thus, property owners with boundary disputes often inquire about the possibility of recovering their costs and attorneys' fees in the event that the prevail in an adverse possession case.

For all its criticism, the Texas Legislature has generally been sensitive to the sanctity of land ownership in Texas. For that reason, it enacted Section 16.034(a) of the Texas Civil Practice and Remedies Code to allow the Court (in its discretion) to award costs and reasonable attorneys' fees to the prevailing party in a suit for the possession of real property where one party is "claiming under record title to the property and one claiming by adverse possession." TEX. CIV. PRAC. & REM. CODE ANN. § 16.034(a). However, this grant of discretionary authority for trial courts to award fees didn't have much of an impact on the number of adverse possession suits, including those where claims of ownership by adverse possession were simply frivolous.

To address this concern, statutory revisions were made in 2009, and Section 16.034(a) now requires the trial court to award attorney’s fees “if the court finds that the person unlawfully in actual possession made a claim of adverse possession that was groundless and made in bad faith, . . . .” TEX. CIV. PRAC. & REM. CODE ANN. § 16.034(a) (Vernon Supp. 2009).

The issue of unlawful possession is still part and parcel of the availability of attorney’s fees under section 16.034(a). TEX. CIV. PRAC. & REM. CODE ANN. § 16.034(a). However, under the statutory revisions, the presence of these elements, together with a finding of bad faith, frivolity and/or groundlessness will necessarily result in the shifting of costs and attorneys' fees.

When considering whether to litigate a trespass, title dispute or adverse possession claim, a landowner shouldn't count on having the opposing party pay his or her attorneys' fees. However, given the 2009 revisions to Section 16.034(a), the frequency of such recovery in those cases involving groundless claims of adverse possession seem much better.