Ownership & Title — Texas Real Estate

Forms of Ownership

Sole Ownership (Severalty)

One person or legal entity holds title alone. All rights reside with the single owner; no co-owner consent required for any transaction.

Tenancy in Common

• Two or more owners each hold an undivided interest in the whole property
• Interests may be unequal (e.g., 70/30 split)
• Each owner may freely transfer their interest without consent of others
• No right of survivorship — a deceased owner's share passes to their heirs or devisees, not to surviving co-owners
• Default form when two or more people acquire title without specifying another form

Joint Tenancy with Right of Survivorship (JTWROS)

• Requires the Four Unities: Time, Title, Interest, Possession (all equal, all acquired together)
• Right of survivorship: A deceased joint tenant's share automatically passes to surviving joint tenants — bypasses probate
• Must be expressly created in Texas; the deed must state "as joint tenants with right of survivorship" or similar language
• Any joint tenant can sever their interest by conveying it; the new owner takes as tenant in common

Community Property

Texas is a community property state. Property acquired during marriage is presumed to be community property owned equally by both spouses.

| Property Type | Definition | |---|---| | Community property | Acquired during marriage with community funds or labor | | Separate property | Owned before marriage, or received during marriage by gift/inheritance |

Key rules:

• Both spouses must sign a deed to convey community property
• Separate property retains its character unless commingled
• Upon death, each spouse can only devise their ½ of community property
• A partition agreement can convert community property to separate property (and vice versa)

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Title

What Title Means

Title is the concept of ownership — the legal right to possess and use property. Title differs from a deed (which is merely the instrument of transfer).

Chain of Title

The chronological series of recorded documents establishing ownership from the original grant to the present owner. A break in the chain creates a title defect.

Types of Title

Marketable title: Title that a reasonably prudent buyer would accept — free from undisclosed encumbrances and defects that would expose the buyer to litigation. A seller who cannot deliver marketable title is in breach of contract.

Clear title: No liens, encumbrances, or clouds. A subset of marketable title.

Title cloud: Any claim or encumbrance that reduces title's marketability. Resolved through a quiet title action in court.

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Title Insurance in Texas

Texas Title Insurance: Heavily regulated — premiums are set by the Texas Department of Insurance (TDI). All companies charge the same premium for the same coverage amount.

| Policy Type | Protects | |---|---| | Owner's Policy (T-1) | Buyer; issued for purchase price; one-time premium | | Mortgagee's Policy (T-2) | Lender; required by most lenders; amount = loan balance |

Title insurance covers past defects discovered after closing — forgeries, missing heirs, recording errors, fraud in prior transactions. It does not cover future events or matters disclosed in the policy exceptions.

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Recording and Notice

Texas follows a race-notice recording statute:

• A subsequent buyer who takes without notice of a prior unrecorded interest and records first prevails
• Recording creates constructive notice to the world
• Actual notice is direct knowledge; inquiry notice arises when facts would prompt a reasonable person to investigate

Exam tip: Always record the deed promptly. An unrecorded deed is valid between the parties but vulnerable to a subsequent bona fide purchaser who records first.