Deed Warranties and Covenants in Texas

Introduction

Implied covenants in a deed are conceptually and legally separate from express warranties o (i.e., whether a deed offers a general warranty, a special warranty, or no warranties at all). “A [covenant or warranty] in a conveyance is not part of the conveyance proper; it neither strengthens, enlarges, nor limits the title conveyed, but is a separate contract on the part of the grantor to pay damages in the event of failure of title. A warranty of title does not warrant the title of grantor but instead warrants the title of the grantee.” Chicago Title Insurance Company v. Cochran Investments, Inc. 602 S.W.3d 895 (Tex. 2020).

PART ONE:
EXPRESS WARRANTIES AND COVENANTS

General Warranty Deed

The term warranty deed refers to a deed that contains both express and implied title warranties. (There is also a deed without warranties, discussed below.) The title warranties in a deed may be general or special. “A warranty of title may take the form of either a general or a special warranty. A general warranty applies to any failure or defect in the grantee’s title, whatever the source, By contrast, under a special warranty, the grantor warrants the title only against those claiming by, through or under the grantor.” Chicago Title Ins. v. Cochran Invs., 602 S.W.3d 895 (Tex. 2020).

A general warranty deed is the preferred form of deed for a buyer because it contains the most expansive warranty of title; it expressly warrants the entire chain of title all the way back to the sovereign, and it binds the grantor to defend against title defects even if those defects were created prior to the grantor’s period of ownership. As a matter of custom, general warranty deeds predominate in sales of residential property.

Special Warranty Deed

In a special warranty deed, title is warranted only from the grantor and no further back than that. The grantor’s liability for title defects is therefore limited to his period of ownership up to and including conveyance to the grantee. Example:

“[A] special warranty clause speaks to [a limitation on] the grantor’s liability [to grantee], not its conveyance of [title to the] property. And unlike a quitclaim deed [which contains no warranties], a special warranty clause still protects the grantee with respect to a failure or defect of title created by the grantor [during Grantor’s period of ownership]. . . .” Chicago Title Insurance Company v. Cochran Investments, Inc., 602 S.W.3d 895 (Tex. 2020).

Acceptance of a special warranty should realistically temper the grantee’s expectations. “When a vendee accepts . . . a deed with special warranty, the presumption of law is that he acts upon his own judgment and knowledge of the title, and he will not be heard to complain that he has not acquired a perfect title.” McIntyre v. De Long, 8 S.W. 622 (Tex. 1888).

There is usually no reason not to use a general warranty deed if the property is residential—although executors and trustees commonly use special warranty deeds in the case of residential properties. Commercial properties are typically conveyed by special warranty deed as a matter of custom. Deeds into an investor’s LLC may be either with general or special warranty, depending on the circumstances, but a general warranty is usually preferred.

Deed Without Warranties

A deed without warranties is a conveyance of real property without warranties of title, express or implied. Note that we are talking about title in this context (and the warranties that may or may not be associated with it), not property condition.

Why would anyone make or accept a conveyance without warranties? The usual case is when the parties are unsure as to the extent of the grantor’s interest, or if the grantor is willing to enter into the conveyance only on the condition that there is no liability for doing so. A deed without warranties may transfer the entire interest in a certain property, or it may not. The parties assume the risk of this uncertainty, which is presumably reflected in the (lower) price paid for the property.

A deed without warranties is therefore considered an inferior form of deed, but it nevertheless is effective in transferring whatever title the grantor possesses. Another way to put it: a deed without warranties may transfer record title but it does not necessarily transfer insurable title or marketable title. Even so, as a means of transfer, it is certainly superior to a quitclaim, discussed next.

In drafting a deed without warranties the two statutory covenants (the covenant of seisin and the covenant against encumbrances) should be expressly disclaimed in order to assure that the conveyance is entirely devoid of warranties.

Quitclaims

What typically distinguishes a deed from a quitclaim is that the granting clause in a deed expressly grants and conveys title to the described property, whereas the granting clause in a quitclaim only “quits” and releases to the recipient whatever right, title, and interest is owned by the seller. Thus a quitclaim is more a release of interest than a conveyance. A quitclaim contains no covenant of seisen or warranty of title. Jackson v. Wildflower Prod. Co., Inc., 505 S.W.3d 80, 90 (Tex.App.—Amarillo 2016, pet. denied). “A party cannot be a bona fide purchaser of an interest if it took via quitclaim deed.” Patch Energy LLC v. Indio Minerals LLC, 702 S.W.3d 911 (Tex.App.—Eastland 2024, no pet.).

Express Covenants and Agreements

A deed is an opportunity to spell out additional agreements between the parties within the four corners of the deed itself. This can eliminate any doubt or ambiguity as to the content of those agreements, an important measure in eliminating the potential for post-closing litigation.

Some lawyers take the view that a deed should be a pure and spare conveyance, uncluttered by clauses and agreements that do not bear directly upon the transfer of title or warranties of title. This minimalist approach often necessitates preparation of companion documents designed to contain additional conveyance-related deal-points that have been agreed to between the parties. As a result, several documents are required rather than one. This may have value when the parties’ side agreements are confidential (and not intended to be reflected in the public deed records), but otherwise it may be simpler and more direct to include such agreements in the deed itself.

An important example of a custom agreement between grantor and grantee is conveyance of the property in “as is” condition, without obligation on the part of the grantor to repair or remediate the property and without post-closing liability for conditions that may be found upon it. How can a grantor insure that the “as is” provision is unconditionally accepted by the grantee? The answer is to require that the grantee sign and acknowledge the deed. The deed thus becomes a contract as well as a conveyance.

PART TWO:
IMPLIED COVENANTS IN A TEXAS DEED

Six Common Law Implied Covenants

Implied covenants in a Texas deed may arise by common law or by statute (the Property Code). At common law, a deed is accompanied by six implied covenants:

(1) the covenant of seisin (the grantor is the owner of the
property being sold);

(2) the covenant against encumbrances (the land is owned
free and clear of liens);

(3) the covenant that the grantor has the right to convey the property without joinder of others;

(4) the covenant of quiet enjoyment, which represents an assurance by the grantor that the grantee’s title will not be disturbed by third-party claims;

(5) the covenant of warranty, obliging the grantor to defend title against challenges by others; and

(6) the covenant of further assurances, meaning a promise by the grantor that will take such other and further actions in the future as may be necessary to vest title in the grantee.

The law of implied covenants has been established in Texas law for quite some time. The covenant of seisen is probably the most important. The common-law covenant of seisin is a representation on the part of the grantor that the grantor is, in fact, the owner of the property. “The covenant of seisin is breached by the grantor at the time the instrument is made if [the grantor] does not own the estate in the land [that the grantor] undertakes to convey. . . . [In] the absence of any qualifying expressions, [such implied covenants] are read into every conveyance of land or an interest of land except in quitclaim deeds.” Childress v. Siler, 272 S.W.2d 417, 420 (Tex.Civ.App.—Waco 1954, writ ref’d n.r.e).

Two Statutory Implied Covenants

The Property Code (without excluding the existence of other implied common-law covenants) recites only two statutory covenants: (1) an attenuated version of the covenant of seisin and (2) the covenant against encumbrances:

Prop. Code Sec. 5.023. Implied [Statutory] Covenants [in Texas Deeds]

(a) Unless the conveyance expressly provides otherwise, the use of “grant” or “convey” in a conveyance of an estate of inheritance or fee simple implies only that the grantor and the grantors heirs covenant to the grantee and the grantees heirs or assigns:

(1) [Covenant of seisin means] that prior to the execution of the conveyance the grantor has not conveyed the estate or any interest in the estate to a person other than the grantee; and

(2) [Covenant against encumbrances means] that at the time of the execution of the conveyance the estate is free from encumbrances [i.e., debts and liens].

(b) An implied covenant under this section may be the basis for a lawsuit as if it had been expressed in the conveyance.

Note that Section 5.023 changes the common-law covenant of seisin to mean that the grantor has not previously conveyed the property to someone else, which is not quite the same thing as saying that the grantor is the owner of the property being sold It is unclear what advantage this more limited covenant may possess, except perhaps to make it slightly easier for a swindler to flim-flam a gullible grantee.

Grant, Sell, and Convey

Even though deeds may legitimately vary in form in Texas, the use of the traditional phrase “grant, sell, and convey” will always include the two statutory covenants contained in Section 5.023 plus the implied common-law covenants—unless these are excluded by express language in the deed.

One occasionally hears about the implied covenant of habitability and the implied covenant of good and skillful construction. Both of these covenants exist in Texas, but apply only in the case of newly-built residences. Centex Homes v. Buecher, 95 S.W.3d 266, 273 (Tex. 2002).

Covenants in a Deed Versus Warranties of Title

Implied covenants in a deed are conceptually and legally separate from warranties of title (i.e., whether a deed offers a general warranty, a special warranty, or no warranties at all). “A warranty clause in a conveyance is not part of the conveyance proper; it neither strengthens, enlarges, nor limits the title conveyed, but is a separate contract on the part of the grantor to pay damages in the event of failure of title. A warranty of title does not warrant the title of grantor but instead warrants the title of the grantee.” Chicago Title Insurance Company v. Cochran Investments, Inc. 602 S.W.3d 895 (Tex. 2020). A title “examiner generally does not need to address the issue of title warranties, because warranties are not a part of the conveyance and do not enlarge the title.” Standard 4.130, Texas Title Examination Standards.