Real Estate Deeds — Preventing Mistakes
In my real estate practice, I have helped solve many unusual problems for clients who are in the process of buying or selling real property. It’s amazing how often mistakes are made in basic documents. No one knows the mistake has been made until the owner tries to sell the property.
The real estate deed is the basic document of ownership. The deed conveys title to the property from one person (the Seller or “Grantor”) to another person (the Buyer or “Grantee”).
The name of the Grantor on the deed should be exactly the same as the name he used as grantee when he purchased the property. For instance, if James Smith bought the property and is now selling it, he should use the name “James Smith” and not “Jim Smith” or “James A. Smith” as Grantor. It’s very important to have consistency so the title to the property can more easily be traced. Addresses for Grantor and Grantee should also be included.
It is essential that the legal description is correct. The legal description should be taken from a previous deed or from a title commitment. Tax records do not provide adequate legal descriptions. I recently had a case where the client was trying to sell her house and the buyer’s broker told her she had the wrong legal description. My client produced a deed showing the legal description she claimed belonged to her property. Fortunately, the broker was able to furnish a plat (or map) of the subdivision. When my client showed me the location of her lot on the plat, it became clear that a mistake had been made in the deed to her when she bought the house. We were able to correct the mistake by filing an amended deed so the sale could go through as planned.
The deed must also recite consideration. Consideration is what was given in exchange for title to the property. The consideration can be the actual purchase price or it can be some other number. Very often the seller and buyer do not want the actual price to be made public, so they will recite consideration of “ten dollars and other good and valuable consideration”. If the buyer has obtained financing for the purchase, the amount of the note, but not the total sales price, will be shown on the deed.
Reservations and Exceptions to Conveyance and Warranty
Reservations and exceptions must be stated in the deed. They are real property matters that are not part of the sale. For instance, a seller may want to sell the land but keep a mineral interest such as any oil or gas found under the surface of the property. Any reservations and exceptions contained in the previous deed to the seller must also be in the deed from the seller to the buyer. Otherwise, the seller would be trying to sell something he does not own.
Every deed must have a granting clause where the grantor “grants, sells and conveys” the property to the Grantee. This section also indicates whether the deed is a special warranty deed or a general warranty deed.
The deed must include a confidentiality notice advising the parties that they have the right to delete social security numbers and driver’s license numbers from the document. If the notice is not given, the county clerk may not file the deed.
Finally, the deed must be signed by the Grantor and his signature must be notarized.
If a buyer and seller are working with a title company or if the buyer is having the purchase financed, there is a better chance of avoiding problems in a deed than if they are exchanging property without the benefit of a professional. Having said that, however, I see errors in deeds and other closing documents much more often than one would expect. The best way to avoid mistakes is to have all closing documents reviewed by an experienced Houston real estate attorney prior to closing the sale.