Types of Specialized Deeds in Texas: Part 2
Welcome back to the second installment of our series on specialized deeds in Texas. As with the first part, we aim to clarify the various types of specialized deeds that you might come across in Texas real estate transactions.
Lady Bird Deed (Enhanced Life Estate Deed)
A Lady Bird Deed, often called an Enhanced Life Estate Deed, is a unique way to transfer property after death without going through probate. The deed allows the property owner to maintain full control during their lifetime — meaning they can sell, lease, or mortgage the property at will, without out joinder of a beneficiary. Upon their death, the property automatically passes to a named beneficiary. This deed is often used in Medicaid asset protection, but is becoming a common alternative to Transfer-on-Death Deeds for the reasons mentioned above.
Transfer-on-Death Deed
The Transfer-on-Death Deed is another tool to sidestep the probate process. Similar to the Lady Bird Deed, it allows a property owner to name a beneficiary who will automatically inherit the property upon the owner’s death. However, unlike the Lady Bird Deed, the owner can’t sell or mortgage the property without the beneficiary’s consent.
Mineral Deed
Unlike a lease, where the right to extract the oil, gas, or minerals is granted for period of time, a Mineral Deed transfers ownership of the oil, gas, or minerals to the buyer. It’s a way to sell off mineral rights while retaining ownership of the surface of the land itself.
Partition Deed
When multiple people co-own a property and wish to divide it into individual portions, a Partition Deed comes into play. This deed divides the property in a way that each owner gets a separate, distinct piece of the land. It’s a handy tool for family members who have inherited property or investment groups who initially bought property together, who later decide to split up the property.
Owelty Deed
An Owelty Deed is a type of partition deed that allows a co-owner buying another co-owner’s interest to mortgage the buying co-owner’s interest in homestead property. It is used where the buying co-owner is borrowing money to purchase another co-owner’s interest. It is sometimes used in divorces or in connection with inherited property.
Sheriff’s Deed
Nobody wants to face a forced sale of property to pay a lawsuit judgement, but if it happens, you might encounter a Sheriff’s Deed. When a judgment lien on non-homestead property is foreclosed upon, this deed transfers ownership from the original owner to the highest bidder at a sheriff’s sale.
Tax Deed
Falling behind on property taxes can lead to a Tax Deed, a deed that transfers ownership of a property to a new owner when the original owner fails to pay property taxes. This deed is used after a public auction where the property is sold to the highest bidder.
In summary, in Texas there is a wide array of specialized deeds, each catering to specific circumstances or needs. We hope this two-part series has been helpful in learning about the types of specialized deeds you may encounter in Texas. Being knowledgeable about these deeds can empower you to make informed decisions in your property transactions.
This article is not legal advice. If you have questions about this article or are considering a real estate transaction, contact the trusted and experienced real estate attorneys at Moore Ganske Murr Sessions pllc. Our real estate practice group includes attorneys board certified by the Texas Board of Legal Specialization in Commercial Real Estate Law, Residential Real Estate Law, and Farm and Ranch Real Estate Law.