Probate Disputes Involving Invalid Real Estate Transfers

Probate disputes often involve wills that intentionally omit or fail to provide for one or more children. The probate courts provide a forum for resolving these disputes. But the omitted children may not want to deal with the probate process. For example, they may just file deeds to transfer the decedent’s real estate to themselves without involving the probate court. These out-of-court transfers are typically not valid, but can be costly for the estate to fix. The recent Estate of Abraham, No. 08-18-00089-CV (Tex. App. [El Paso] – 2019) provides an example of this.

Facts & Procedural History

This court case involves the probate of an estate for a Texas attorney. The attorney prepared a will that left everything to his surviving wife and, as alternate beneficiaries, his grandchildren. The will did not provide for his surviving son. It also did not appoint the surviving son as the executor for the administration of the probate.

One part of the probate dispute involved land the decedent had purchased in Austin, Texas. The decedent was the only party listed on the deed to the property. The decedent’s wife was not listed on the deed, even though the land was purchase during the time the decedent was married.

Four months after the decedent’s death, the surviving son filed a new assumption and warranty deed to transfer the land from the decedent to himself. The deed for the land was signed and dated prior to the date the decedent died. The surviving son alleged that he had purchased the property from his father during the father’s lifetime.

Before filing the deed, the surviving son had a notary stamp the deed. The notary backdated the stamp, which she admitted in a letter to the court. So the notary signed the document after the decedent had already died.

Two years after the decedent died and as part of this probate dispute, the surviving spouse filed a deed transferring her community property interest in the land to the surviving son.

The ensuing probate litigation addressed ownership of the land.

Real Estate Deeds in Texas

Section 5.021 of the Texas Property Code sets out the requirements for real estate deeds in Texas. It says:

A conveyance of an estate of inheritance, a freehold, or an estate for more than one year, in land and tenements, must be in writing and must be subscribed and delivered by the conveyor or by the conveyor’s agent authorized in writing.

Section 12.001 goes on to set out requirements to file real estate deeds in Texas. it says:

(a) An instrument concerning real or personal property may be recorded if it has been acknowledged, sworn to with a proper jurat, or proved according to law.

(b) An instrument conveying real property may not be recorded unless it is signed and acknowledged or sworn to by the grantor in the presence of two or more credible subscribing witnesses or acknowledged or sworn to before and certified by an officer authorized to take acknowledgements or oaths, as applicable.

(c) This section does not require the acknowledgement or swearing or prohibit the recording of a financing statement, a security agreement filed as a financing statement, or a continuation statement filed for record under the Business & Commerce Code.

(d) The failure of a notary public to attach an official seal to an acknowledgment, a jurat, or other proof taken outside this state but inside the United States or its territories renders the acknowledgment, jurat, or other proof invalid only if the jurisdiction in which the acknowledgment, jurat, or other proof is taken requires the notary public to attach the seal.

Thus, the real estate deed must be in writing and, if the parties intend on filing the deed in the public records, the deed must be signed by two witnesses or notarized.

As noted by the surviving son in this case, a real estate deed is not invalidated as to the grantor and grantee even if the deed is not witnessed or notarized. The real estate deed just cannot be filed in the public records. The real estate deed does not have to be filed in the public records to be valid. The party to the unrecorded deed just runs the risk that a third party (such as a creditor without notice of the deed or a party who purchases the property for value) is able to obtain superior title to the real estate.

But this is a moot point in this case, given that the surviving spouse did not sign the deed.

Texas Real Estate Deeds Need to Be Signed by Both Spouses

Because Texas is a community property state, real estate acquired during marriage is generally community property. This means that the husband and wife each own an interest in the property.

A real estate deed that conveys community property typically has to be signed by both the husband and wife. Section 3.102(c) of the Texas Family Code provides for this. It says:

community property is subject to the joint management, control, and disposition of the spouses unless the spouses provide otherwise by power of attorney in writing or other agreement.

This means that, absent a power of attorney or other agreement, one spouse cannot partition real estate so that the property is owned by the other spouse and a third party who purchases or receives the transferring spouses interest in the real estate.

The deed between the decedent and surviving son was not signed by the surviving spouse. Thus, the transfer in the deed was not valid. The appeals court noted that this deed was invalid.

Real Estate Deeds Filed During the Probate Process

But what about the second deed–the one signed by the surviving spouse after the decedent’s death? Did that deed transfer the surviving spouse’s community property interest inthe property to the surviving son?

Section 360.253 of the Texas Estates Code comes into play here. It imposes certain requirements on the ability to partition and transfer community property while a probate case is pending for one of the spouses. These requirements include obtaining court approval and posting a bond to protect the estate’s creditors, for example.

The second real estate deed by the surviving spouse did not meet these requirements. The surviving spouse did not obtain the court’s approval or post a bond. Thus, the second deed executed by the surviving spouse was not valid.

Estate Planning to Carryout The Decedent’s Intent

While the decedent was a Texas attorney in this case, the case highlights the importance of estate planning prior to death. The process of planning for an estate often brings issues like this to light, so they can be addressed during the decedent’s lifetime.

Had the decedent intended the real estate pass to his surviving son, this would have been an easy fix during his lifetime. The decedent and his wife could have filed a deed to record the transfer. If this wasn’t his intent, he could have filed a Texas ladybird deed or transfer on death deed to effectuate the transfer he intended.