Deed Execution and Recording in Texas

PART ONE: EXECUTION AND DELIVERY

Execution of the Deed

Execution and delivery are required for an effective Texas deed. The last requirement—delivery—cannot be ignored. A deed must be delivered, actually or constructively, in order to be effective. “A conveyance of an interest in real property must: (1) be in writing, (2) be signed by the grantor, and (3) be delivered to the grantee.” Prop. Code Sec. 5.021.

Acknowledgment before a notary is a requirement for recording the deed. Online notaries are permitted by Chapter 406 of the Government Code.

Using a Power of Attorney to Execute a Deed

Generally, according to the Estates Code, property transactions involving the use of a power of attorney require that the POA be recorded in the county clerk’s real property records within 30 days of the date the deed is recorded:

Est. Code Sec. 751.151. A durable power of attorney for a real property transaction requiring the execution and delivery of an instrument that is to be recorded . . . must be recorded . . . not later than the 30th day after [recording of the first instrument].

It therefore makes sense to draft powers of attorney in recordable form including the statutory notice of confidentiality rights at the top per Property Code Section 11.008.

Delivery of the Deed

“Manual delivery of the deed is not . . . required. The test is not physical possession, but whether the grantor gave grantee control of the deed.” This may be accomplished by means of delivery through a third person. Wheatley v. Farley, 610 S.W.3d 511 (Tex.App.—El Paso 2020, no pet.).

A 2010 Texarkana case holds:

Conveyance by deed requires delivery of the deed. Delivery of a deed has two elements: (1) the grantor must place the deed within the control of the grantee (2) with the intention that the instrument become operative as a conveyance. The question of delivery of the deed is controlled by the intent of the grantor, and it is determined by examining all the facts and circumstances preceding, attending, and following the execution of the instrument.

See Chambers v. Equity Bank, 319 S.W.3d 892 (Tex.App.—Texarkana 2010, no pet.).

Intention is a critical component of the delivery requirement. A showing that a deed was executed and delivered with an intent to convey the property is sufficient to establish that the deed vested title in the grantee. Stephens County Museum, Inc. v. Swenson, 17 S.W.2d 257, 261-62 (Tex. 1975).

Proof that a deed was recorded creates a presumption of and establishes a prima facie case of delivery and intent by the grantor to convey the land. Troxel v. Bishop, 201 S.W.3d 290, 297 (Tex.App.—Dallas 2006, no pet.). Both cases are cited with approval in Watson v. Tipton, 274 S.W.3d 791 (Tex.App.—Fort Worth 2008, pet. denied).

Presumption of Acceptance

When a grantor transfers property, title to the property vests in the grantee upon execution and delivery of the deed. The grantee’s acceptance is not usually indicated anywhere on the document. Acceptance (express or implied) is generally presumed pursuant to the common law doctrine of estoppel by deed.

In Armour Pipe Line Co. v. Sandel Energy, Inc., 672 S.W.3D 505 (Tex.App.—Houston [14th Dist.] 2023, no pet.), the court states:

Under the estoppel-by-deed doctrine, a person is bound by the recitals in a deed in which the person was a party or in which the person’s predecessor in title was a party if the party claims title through the deed. . . . [A recital is] the formal statement or setting forth of some matter of fact, in any deed or writing, in order to explain the reasons upon which the transaction is founded. . . . [E]achparty to a deed is bound by the reservations in a deed in which the party or its predecessor in title was a party if the party claims title through the deed. . . .

Although estoppel by deed operates most commonly against a grantor, this doctrine also operates against a grantee who accepts a deed. . . . Under the estoppel-by-deed doctrine . . . between the grantor and the grantee and those in privity with them, the reservations [recitals, and agreements] in the deed are binding and effective. . . .

Notwithstanding the estoppel by deed doctrine, “acceptance of a deed is never presumed where the deed imposes burdens and obligations on the grantee to be performed by him. In such case his acceptance must be shown, not by resort to mere presumption, but by actual evidence just as in the case of any other contract.” Taylor v. Sanford, 108 Tex. 340, 193 S.W. 661 (1917).

There is also a case stating that a “deed which is not accepted by the grantee does not convey any interest in the land.” Martin v. Uvalde Sav. and Loan Ass’n, 773 S.W.2d 808 (Tex.App.—San Antonio 1989, no writ).

If the grantor wishes to confirm that a deed has been delivered and accepted, it is always possible to require that the grantee sign and acknowledge it. This practice is especially useful when the deed includes custom clauses that go beyond a bare-bones transfer with title warranties (an “as is” clause is a common example).

Why should a grantor rely on estoppel by deed and take the risk that a grantee does not fully or unconditionally accept the deed as written?

If the deed is signed and acknowledged by the grantee, then ambiguity about whether or not there is grantee acceptance to any agreements stated therein is eliminated, particularly if the acknowledgment is amended slightly to expressly recite acceptance of the deed’s terms.

Doctrine of After-Acquired Title

The doctrine of after-acquired title relates to the timing of the effectiveness of a conveyance. If I give you a deed today to property that I do not own (the Astrodome, for instance) it has no effect; but if next week I happen to acquire the Astrodome then the deed I previously gave you comes to life and the property is yours.

The doctrine of after-acquired title is also broadly known as estoppel by deed, which means that “all parties to a deed are bound by the recitals therein, which operate as an estoppel, working on the interest in the land if it be a deed of conveyance, and binding both parties. . . . Estoppel by deed or contract precludes parties to a valid instrument from denying its force and effect.” Sauceda v. Kerlin, 164 S.W.3d 892 (Tex.App.—Corpus Christi 2005), rev’d on other grounds, 263 S.W.3d 920 (Tex. 2008).

Deeds and the Rule Against Perpetuities

The traditional common law Rule Against Perpetuities states that “no [conveyance of an] interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest plus gestation period if gestation exists. . . . The law will presume that [a conveyance] is intended to be exercised within a reasonable time. Maupin v. Dunn, 678 S.W.2d 180 (Tex. App.—Waco 1984, no writ).

However, Property Code Section 5.043 mitigates the application of this rule to deeds by allowing courts to liberally “validate an interest to the fullest extent consistent with the creator’s intent.”

PART TWO: RECORDING

Must deeds be recorded to be valid?

No. There is no requirement that a deed be recorded in order to be valid—only that it be executed and delivered to the grantee, at which time the transfer is fully effective between grantor and the grantee. Even though unrecorded, it is also “binding on the parties’ heirs and on a subsequent purchaser who does not pay a valuable consideration or who has notice of the instrument.” Prop. Code Sec. 13.001(a) and (b).

An original deed may be recorded in the real property records if it is signed and acknowledged by the grantor. “An instrument that is properly recorded in the proper county is (1) notice to all persons of the existence of the instrument and (2) subject to inspection by the public.” Prop. Code Sec. 13.002.

Recording a deed makes it easier for title companies to research and insure the chain of title. Title companies insist on recording for this reason. Recording also informs the taxing authorities where ad valorem tax bills should be sent.

In Thompson v. Six Shooter Enterprises, LLC, 633 S.W.3d 107 (Tex.App.—El Paso 2021, no pet.), the court states:

In Texas, it is settled that title to real property will vest upon execution and delivery of the deed. . . . The recording of the deed is not necessary to pass title. . . . The recording, however, establishes a prima facie case of delivery and the accompanying presumption that the grantor intended to convey the land according to the terms of the deed. . . .

Although equitable title to real property passes at the time a deed is delivered, a delay in recording of the deed leaves open the possibility that the prior owner could illegally purport to convey the same property to a different purchaser. . . .

This possibility arises because the prior owner still appears to be the current, legal owner when the subsequent purchaser searches the public record. . . . In such a case, of course, both purchasers would claim title to the property. . . .

Texas law settles such a dispute over competing deeds in favor of the first to record, even where the first to record is a subsequent purchaser, as long as such deed holder qualifies as a subsequent [bona fide] purchaser for value pursuant to Section 13.001(a) of the Property Code.

The Texas Recording Statute

Texas is considered a notice state for recording purposes, meaning that recording an instrument with the county clerk (1) gives notice to the world of the transfer and (2) establishes priority in the event an unscrupulous seller attempts to convey the property twice. “Recorded instruments in a grantee’s chain of title generally establish an irrebuttable presumption of notice.” Noble Mortg. & Invs. v. D&M Vision Invs., 340 S.W.3d 65, 76 (Tex.App—Houston [1st Dist.] 2011, no pet.).

Being a notice state is contrasted with the old common-law rule of first-in-time first-in-right. The latter rule prevailed in historical times primarily because there was no central registry of real property transactions.

“For property interests, notice has two forms: actual and constructive. . . . A recorded interest provides constructive notice, and a purchaser takes property subject to the recorded interest regardless of whether the purchaser had actual notice. . . . When a duty to inquire exists, negligent ignorance has the same effect in law as actual knowledge.” 425 Solead, Ltd. v. CRVI Riverwalk Hospitality, LLC, 709 S.W.3d 551 (Tex. 2024).

Requirements and Effects of Recording

Property Code Chapters 12 and 13 govern the requirements and effects of recording. Property Code Section 13.001 states:

Prop. Code Sec. 13.001. Validity of Unrecorded Instrument

(a) A conveyance of real property or an interest in real property or a mortgage or deed of trust is void as to a creditor or to a subsequent purchaser for a valuable consideration without notice unless the instrument has been acknowledged [and recorded].

(b) The unrecorded instrument is binding on a party to the instrument, on the party’s heirs, and on a subsequent purchaser who does not pay a valuable consideration or who has notice of the instrument.

Prop. Code Sec. 13.002. Effect of Recorded Instrument. An instrument that is properly recorded in the proper county is: (1) notice to all persons of the existence of the instrument; and (2) subject to inspection by the public.

Electronic Documents and Signature

Property Code Section 15.004 recognizes the validity of electronic real property documents generally: “If a law requires, as a condition for recording that a document be an original . . . the requirement is satisfied by an electronic document [and] an electronic signature.” The notary acknowledgment may also be electronic without the need for any stamp, impression, or seal.

Texas also authorizes electronic filing pursuant to the Uniform Electronic Transactions Act. Bus. & Com. Code Sec. 322.001-21.

Bona Fide Purchasers

The common law bona fide purchaser doctrine operates side-by-side with the recording statute and protects BFPs who pay reasonably equivalent value for the property.

A person is a BFP (and therefore protected) if he or she is a good-faith purchaser of legal title to real property; pays valuable consideration; and does so without actual or constructive notice of the judgment lien—meaning the buyer cannot have any awareness (from whatever source) of the existence of a judgment against the seller. Accordingly, a last-minute transfer by the judgment debtor to his brother-in-law for ten dollars and other valuable consideration will fool no one and is voidable.

“A person who invokes [the bona fide purchaser] affirmative defense carries the burden of establishing good faith and the reasonable equivalence of the consideration obtained.” Hahn v. Love, 321 S.W.3d 517, 526 (Tex.App.—Houston [1st Dist.] 2009, pet. denied).

Clerks’ Recording Requirements

For a document to be recordable in the real property records, county clerks generally require that a document:

(1) contain a one-inch margin at the top of each page;
(2) contain an identifying heading or title;
(3) contain original signatures;
(4) include a notary acknowledgement for each signature in each capacity;
(5) be legible and reasonably readable;
(6) signatures must have the name typed, printed or stamped; and
(7) the address of the grantee must appear in the body of the document.

This is what is meant by saying that a document is in recordable form. If any of the foregoing items is lacking, the document may be rejected for filing or a penalty fee may be charged. Refer also to Property Code Chapters 12 and 13 for statutory recording requirements.