Rice Business Report September 2019 September 2019 Rice Business Report | Page 2

Rice Business Report September 2019
Five Ways to Create Title Problems in Real Estate
Real estate is land and anything permanently attached to the land. So a house is real estate, but so is the tree in
the yard, the fence, the driveway, and the covered patio you added last year. Real estate is also called real proper-
ty; personal property is anything that is not permanently attached to the land, such as furniture, livestock, most
appliances, and most mobile homes.
For most people, the only real property they own is their home, which is also their biggest single asset. Therefore,
it’s important to know what not to do when buying or selling real property, in order to avoid creating title prob-
lems. Here are six of the most common ways that we see people cause themselves title problems that are far
more expensive to fix than it would have been to consult a lawyer.
1. Use of Quit Claim Deeds. Many people wrongly believe that the can transfer title to property by using a quit
claim deed. However, in Texas, a quit claim deed transfers only the grantor (seller’s) interest in the property, not
title to the property itself. Therefore, when the buyer later tries to sell the property, they find that they don’t own
it. The seller may be long gone, and clearing up this problem may require a law suit, which is thousands of dollars
more expensive than it would have been to simply have a proper deed prepared by a lawyer.
2. Transfers to Spouses. Newly married couples often want to transfer interest in the house owned by one of them
before marriage to the other. This is almost always a bad idea, and detrimental to the spouse that owned the
property before the marriage. Property owned before marriage is separate property, and in the event of a divorce,
cannot be divided by the court. Once an interest in the house is given to the other spouse, the house usually be-
comes ½ the separate property of each of them. Worse, if done incorrectly, title to the whole house may be lost.
3. Failure to Probate. People often believe that they have inherited property, but never bother to either probate
the will, or have an heirship proceeding done to transfer title. The result may be that dozens of relatives may have
an interest in the property, making it impossible to sell without the cooperation of all of them, and inevitably one
person gets stuck with the taxes, insurance an maintenance costs - not always the person living in the house. Seri-
ously, no one gets along well enough with their relatives that they should be sharing title with more than one of
them! It’s much less expensive to go through a probate/heirship proceeding for inherited property promptly
4. Buying Property without Receiving a Deed. These situations usually fall into two catagories either a Contract for
Deed (sometimes called “rent to own”) or a purchase “subject to” an existing mortgage. Both are popular with
realtors who want to sell a property to a buyer who cannot qualify for a mortgage, and both are almost invariably a
terrible deal for either the buyer or seller
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