Full question:
Can I transfer property that has a lien from the bank to a corporation via a warranty deed? I understand that this will not relieve me of the liability.
- Category: Real Property
- Subcategory: Deeds
- Date:
- State: Texas
Answer:
A warranty deed typically includes specific phrases required by state law, such as "conveys and warrants." This type of deed carries several warranties from the grantor (the person transferring the property) to the grantee (the person receiving the property). These warranties include:
- The grantor is the lawful owner of the property at the time of the deed's execution and has the right to convey it.
- The property is free from all encumbrances or liens.
- The grantor will defend the title so that the grantee and their heirs can enjoy peaceful possession of the property.
Even if you transfer the property via a warranty deed, it does not eliminate your personal liability for the loan from the bank. You would still need to repay the loan according to the promissory note.
In contrast, a special warranty deed limits the grantor's liability by only warranting what is explicitly stated in the deed. This type of deed is often used by corporations to avoid the full liabilities of a general warranty deed. A special warranty deed should also include the appropriate language, such as "conveys and specially warrants." It typically warrants that the grantor did not impair the title during their ownership.
However, if there is an encumbrance or lien on the title, a warranty deed will not change that. The grantor would remain liable to the grantee for any existing liens upon transferring the property.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.