Lifetime gifts of real estate generally pass outside of the probate process, as they pass prior to probate. However, these transfers are often not discovered until the death of the property owner.
This is why these disputes are often part of the probate process. Probate disputes often involve disputes over property that was purportedly or actually gifted during the decedent’s lifetime. It is also common for these lifetime transfers to be made by persons holding a power of attorney for the decedent at the time of the transfer.
The recent Williams v. Provost, No. 14-22-00080-CV (Tex. App.–Houston [14th Dist.] 2023) provides an example of this type of case. The case involved a lifetime deed that was purportedly gifted to one son during the decedent’s lifetime, only to be overturned during the probate process several years later.
Facts & Procedural History
A husband bought real estate in Houston. He then got married. The son had returned to Houston and had his own residence, but continued to take care of the husband and his mom.
Before he died, he filed a gift deed to transfer the Houston property to his wife’s son. The gift deed listed the parties. After the husband’s name, the deed included this language: “Earl Howard, spouse of Sandra Howard, dealing with one-half (1/2) community property interest.”
The gift deed also had subheadings containing the property description, exception and reservation in the deed. None of these mentioned community property.
During the probate process, the parties disputed ownership of the property. The parties agree that the property was the husband’s separate property, as it was acquired by the husband before marriage. It was not community property.
The trial court concluded that the community property language was a “reservation” and since the husband did not own community property, the deed did not transfer anything to the wife’s son. This had the result of the property being in the husband’s estate and passing to the husband’s children rather than to the wife’s son.
The wife’s son filed this appeal to challenge the probate court’s ruling.
About Deed Exceptions & Deed Restrictions
When someone sells real estate in Texas, they usually execute a deed to grant some or all of the ownership rights to the property to another party. The language in the deed matters. It can grant all or some of the rights, withhold some of the rights, or even create future interests in some or all of the rights.
This is where the terms “exception” and “reservation” come in. Though sometimes used interchangeably, their meanings are distinct.
An “exception” in a real estate deed is an exclusion. When the grantor transfers a property, the exception clause will identify certain rights or interests that are not included in the sale. For instance, let’s say there’s an existing utility easement across the property, allowing a utility company to install and maintain lines. If the deed contains an exception for this easement, the grantee would not acquire ownership over that portion of the property, even though it lies within the property’s boundaries.
On the other hand, a “reservation” in a deed creates a new interest in favor of the grantor. So, even after the sale, the grantor retains specific rights over the property. For example, if the grantor reserves the right to use a driveway on the property, they legally retain that right even after the sale has been finalized.
The principal difference between an exception and a reservation is origin and ownership. An exception involves an interest that the grantor already owns but chooses not to convey. A reservation is the creation of a new interest, which is retained by the grantor after the property is conveyed.
So what did the court say in this case with respect to the community property language? To answer that we have to first consider how courts interpret deeds.
How the Courts Interpret Real Estate Deeds
The courts have developed a structured approach to interpreting real estate deeds.
The first step is to apply the “plain meaning rule.” With this, the court reads the text of the document and interprets it according to its ordinary meaning. The words are taken at face value, as understood by a reasonable person familiar with the language and context. This usually means that the court looks to the dictionary definitions for terms to see what they mean. Given these definitions, if the language is clear and unambiguous, the court’s job is simple: apply the document as it is written, without the need to look for external clues or intent.
However, the language in documents like deeds is not always clear. If the language is ambiguous, meaning it is open to more than one reasonable interpretation, or if there is some internal contradiction, the court will move on to the next steps to try to resolve this ambiguity. This usually involves either trying to determine the intent of the parties or employing various rules of construction.
Intent can be found in a number of ways. When ambiguity is present, the court can consider extrinsic evidence, which can include the circumstances under which the document was created, prior negotiations, subsequent conduct, and any other evidence that may shed light on the intentions of the parties involved. This is done to ensure that the document is interpreted in a way that reflects what the parties meant, rather than what the words simply say.
The other option is to consider the rules of construction. These rules are secondary guidelines to aid in interpretation. For instance:
- Contra Proferentem: This rule suggests that any ambiguity should be resolved against the party that drafted the document.
- Expressio Unius Est Exclusio Alterius: This Latin phrase means “the expression of one thing is the exclusion of another.” In other words, if a document specifies one or more examples of a general rule, the inference is that what is not listed is intended to be excluded.
- Noscitur a Sociis: This rule suggests that a word or phrase should be interpreted by the words immediately surrounding it.
- In Pari Materia: This rule states that laws or contractual clauses on the same subject matter should be interpreted harmoniously, if possible.
- Ejusdem Generis: This rule is used when a list of specific items is followed by general terms; the general terms are then interpreted in light of the specific items listed.
These rules aim to reach an interpretation that is fair, reasonable, and consistent with how similar issues have been settled in the past. Of course, these are not hard and fast rules but are tools that can aid the court in reaching a decision.
The Conflicting Language is Suplusage
The court followed the process outlined above to decide this case. The court started with the plain meaning rule and concluded that the words of the deed were clear and unambiguous. The court did not find that the language was conflicting.
The deed said there were no reservations or exceptions. The deed noted “none” for each. Thus, the court concluded that the “community property” language near the name of the grantor was merely surplusage that was there to help frame the context, not to be a part of the grant language of the deed.
This changed the disposition of the property. The appellate court reversed the trial court. The result is that the deed transferred the property the husband owned and it passed to the wife’s son.
This type of language in the deed could not only result in the property being transferred to the wrong person, but it could also subject the property to claims by other parties, it could make it difficult or impossible to sell in the future, and the grantor or grantee could be sued for damages. We have addressed several examples of these types of issues, such as ladybird deeds that do not provide for a married couple’s interest in the property.
The Takeaway
This case highlights why it is important to use precise language in real estate deeds. The case is a reminder that even seemingly minor errors in a deed can have significant consequences. In this case, the husband’s failure to properly identify the property as his separate property almost resulted in the property passing to his children instead of his wife’s son. The language triggered probate litigation and the costs for the litigation.
Our Houston Probate Attorneys provide a full range of probate services to our clients, including helping with real estate deeds. Affordable rates, fixed fees, and payment plans are available. We provide step-by-step instructions, guidance, checklists, and more for completing the probate process. We have years of combined experience we can use to support and guide you with probate and estate matters. Call us today for a FREE attorney consultation.
Disclaimer
The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.
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