Dear Mr. Premack: About two years ago, my parents signed notarized warranty deeds giving each other their half of their home, and both also signed another deed giving both halves to my sister. The deeds were never filed. They also made Wills. My father died about a year later. Can the property be transferred simply by bringing the notarized deeds to the county courthouse to directly change title owner without having to probate the Will? Or is probate a better way? Seems like just filing the deed is the easiest and cheapest way. – HC
Preparing and signing several deeds that cover different contingencies is not a good estate planning strategy. If your parents did this for themselves, they should have talked to a lawyer instead. If they had a notary prepare the deeds, that person was practicing law without a license and did not serve them well.
In order to transfer title to real property, Texas law states that there must be intent to transfer and that there must be delivery of the deed before a conveyance is legally valid. Delivery means that the signed and notarized deed is put into the custody of the new owner. In your parent’s situation, their exchange of deeds to each other probably met this standard, but the second deed giving both halves to your sister was probably not delivered to her. They were likely keeping all the paperwork in their own possession for safekeeping, waiting to see what would happen.
Even thought the deed between your parents may have met the “delivery” standard, it may not meet the “intent” standard. They signed several deeds at the same time. Which did they intend to take effect? It would be hard to say. What if your sister had taken the deed they signed to her, and recorded it at the courthouse while both parents were still alive? The paperwork would read like she had, at that moment, become the owner of their house. But that is not what they intended; they probably wanted title to stay with them until both of them died.
Another problem arises if the multiple deeds have the same date. If the deed signed by your father transferring title to your mother is recorded now that he’s deceased, then arguably title transfers to your mother as of the date the deed was signed. If your mother lives another ten years and then your sister tries to file the other deed, how will it look that she’s filing a deed twelve years late, and that on that same date there is a deed conveying the house to your mother? Remember, the ultimate goal is for her to be recognized as the owner by the public (and by someone who may want to buy the house in the future). Multiple deeds to different people on the same date create a muddled and confusing situation.
Texas law also states that failure to record an executed deed means that the property transfer is void as to a creditor or subsequent purchaser (who pays for the property and has no actual notice of the unrecorded deed). The unrecorded deed would have been binding on your parents and on their heirs, however, if intent and delivery could be proved. Again, multiple unrecorded deeds create a muddled and confusing situation.
As between your parents only: if there are no stepchildren involved, your mother is considered to be the owner of the home by the laws of descent and distribution so an Affidavit of Heirship could be used. But if your father left debts, his Will should be probated to settle his estate and also to transfer the house to your mother.
Other people should not follow your parents’ example. There are better preplanning options a married couple can use instead of signing multiple unrecorded deeds.
The first better option is to sign and record a community property survivorship agreement. It states that upon the death of a spouse, the survivor owns the property. Instead of being muddled and confused, the survivorship law is a clear and straightforward method for transfer of title between spouses, authorized by the Texas Constitution and by provisions in the Texas Probate Code.
The second better option is to sign and record a life estate deed. In it, the parents retain the legal right to treat their home as their homestead (to live there, enjoy it, and reap the economic benefits of it). They should also retain the legal right to cancel the deed unilaterally, or to sell the property if they have a change of heart. By its terms, one or more of the children can then become owner when both parents die.
The third better option is to create a living trust and transfer house title to the trustee. The trust terms would make the house available for the parents’ use and enjoyment during their lifetimes. The trust would require that upon the second death, title would transfer to one or more of the children. All three preplanning options are well recognized and avoid the confusion that arises from multiple unrecorded deeds.
Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, February 5, 2010