In most divorces, collateral documents are used to effect portions of the decree of divorce, the agreement incident to divorce, or both. These practice notes cover some of the more commonly used documents.
Written and Subscribed Instrument: A written instrument, subscribed and delivered by the conveyer or the conveyer’s agent, is the customary method to convey real estate. Tex. Prop. Code § 5.021; see Truitt v. Wilkinson, 379 S.W.2d 400, 402 (Tex. App.—Texarkana 1964, no writ); Gillman v. Martin, 366 S.W.2d 89, 90 (Tex. App.—San Antonio 1963, writ ref’d). The conveyance is typically some form of a deed. It 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 acknowledgments or oaths, as applicable. Tex. Prop. Code § 12.001(b). A certified copy of the decree of divorce can also be used to transfer real property, provided that the legal description of the property is contained in the decree. See Tex. Prop. Code § 12.013.
Words of Grant: The Texas Property Code provides a form for a conveyance of fee simple title to real estate, but use of the form is not required to effect a valid conveyance. The parties may use any form not in contravention of law. Tex. Prop. Code § 5.022(a), (c). Technical words are not necessary as long as there are operative words of grant demonstrating the grantor’s intention to convey title to the land, the land is sufficiently described, and the deed is signed by the grantor. See Harris v. Strawbridge, 330 S.W.2d 911, 914–15 (Tex. App.—Houston 1959, writ ref’d n.r.e.).
Unless the deed expressly provides otherwise, use of the word grant or convey in a deed gives rise to the implied covenants that, before the execution of the conveyance, the grantor has not conveyed the estate or any interest in the estate to any person other than the grantee and that, at the time of the execution of the conveyance, the estate is free from encumbrances. These implied covenants may be the basis for a lawsuit as if they had been expressed in the conveyance. Tex. Prop. Code § 5.023.
Description of Property: A deed must accurately describe the land being conveyed. If the deed fails to furnish a means of determining with reasonable certainty the land intended to be covered by the deed, the deed is void. Rubiolo v. Lytle, 370 S.W.2d 202, 205 (Tex. App.—San Antonio 1963, writ ref’d n.r.e.). If the description in the deed, by extrinsic evidence, such as parol testimony, can be made to apply to a definite piece of property, the description is sufficient. American Spiritualist Ass’n v. City of Dallas, 366 S.W.2d 97, 102 (Tex. App.—Dallas 1963, no writ); Ehlers v. Delhi-Taylor Oil Corp., 350 S.W.2d 567, 573 (Tex. App.—San Antonio 1961, no writ). If the description is sufficient for a party familiar with the locality to identify the premises with reasonable certainty, or if there is enough in the instrument to enable one, by pursuing an inquiry based on the information contained in the deed, to identify the particular property, the description will also be sufficient. Oswald v. Staton, 421 S.W.2d 174, 176 (Tex. App.—Waco 1967, writ ref’d n.r.e.).
Control of Grantee: Unless the deed has been placed within the control of the grantee by the grantor with the intention that it become operative as a conveyance and has been accepted by the grantee, it will not be effective to pass title. Estes v. Reding, 398 S.W.2d 148, 149 (Tex. App.—El Paso 1965, writ ref’d n.r.e.); Young v. Jewish Welfare Federation, 371 S.W.2d 767, 771 (Tex. App.—Dallas 1963, writ ref’d n.r.e.); Wilson v. Olsen, 336 S.W.2d 899, 901 (Tex. App.—El Paso 1960, no writ).
Consideration: Consideration is not necessary for a duly executed and delivered deed. Woodworth v. Cortez, 660 S.W.2d 561, 564 (Tex. App.—San Antonio 1983, writ ref’d n.r.e.); Cannon v. Wingard, 355 S.W.2d 776, 781 (Tex. App.—Dallas 1962, writ ref’d n.r.e.).
Duress: A deed signed by a spouse in favor of the other spouse may be set aside if the court finds that the deed was executed under duress. In re Marriage of Lopez, No. 14-18-00797-CV, 2020 WL 4523594 (Tex. App.—Houston [14th Dist.] Aug. 6, 2020, no pet.) (mem. op.).
A general warranty deed contains an express covenant of warranty that the grantor and his heirs, executors, and administrators will “warrant and forever defend all and singular the property to Grantee and Grantee’s heirs, executors, administrators, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof.” Its purpose is to indemnify the grantee against any loss or injury he may sustain by a defect in the grantor’s title, with the grantor warranting that he will (1) restore the purchase price to the grantee if the land is entirely lost; (2) discharge any liens or encumbrances incurred before the conveyance that are not assumed by the grantee; and (3) in the event of partial loss, repay the proportionate amount of the consideration that the amount of loss bears to the entire consideration paid. City of Beaumont v. Moore, 202 S.W.2d 448, 453 (Tex. 1947). The liability of the warrantor extends to all cases involving a failure of title to land purported to be conveyed by the terms of the deed. Peavy-Moore Lumber Co. v. Duhig, 119 S.W.2d 688, 690 (Tex. App.—Beaumont 1938), aff’d, 144 S.W.2d 878 (Tex. 1940). If a grantor has conveyed property he did not own by a deed containing a general covenant of warranty and, after the conveyance, actually acquires title to the property, title to the property will pass to his grantee, and the grantor and subsequent purchasers from him will be estopped from disputing the title of the grantee. This principle is known as the doctrine of after-acquired title. Cherry v. Farmers Royalty Holding Co., 160 S.W.2d 908, 909 (Tex. 1942); Baldwin v. Root, 40 S.W. 3, 6 (Tex. 1897).
A special warranty deed is used if the grantor wishes to limit his liability to persons claiming through him alone, rather than warranting the entire chain of title of the property from its inception to his grantee. By addition of the phrase “by, through, or under me, but not otherwise” to the general warranty clause, the general warranty deed is changed into a special warranty deed. Owen v. Yocum, 341 S.W.2d 709, 710 (Tex. App.—Fort Worth 1960, no writ). By limiting the general warranty clause in this manner, the grantor restricts his liability only to claims of title or right asserted through or under him and he has no liability for any defects in title that arose before his title. Garrett v. Houston Land & Trust Co., 33 S.W.2d 775, 777 (Tex. App.—Galveston 1930, writ ref’d). Like a general warranty deed, a special warranty deed will also pass after-acquired title to the grantee named in the special warranty deed. Breen v. Morehead, 126 S.W. 650, 655 (Tex. App. 1910), aff’d, 136 S.W. 1047 (Tex. 1911).
Special Warranty Deed with Lien for Owelty: A special warranty deed with lien for owelty is given when one spouse receives the entire property and seeks to buy out the grantor spouse by refinancing through a third-party lender. The third-party lender will insist on a lien against the entirety of the property, not just a one-half interest. See Sayers v. Pyland, 161 S.W.2d 769, 771 (Tex. 1942).
A quitclaim deed conveys only the grantor’s right, title, and interest in the land described in the deed and not the land itself. Cook v. Smith, 174 S.W. 1094, 1095 (Tex. 1915); Baldwin v. Drew, 180 S.W. 614, 616 (Tex. App.—Beaumont 1915, no writ). If the grantor owns the property at the time of the execution and delivery of the quitclaim deed, the deed will pass title to the property to the grantee, but a quitclaim deed will not pass after-acquired title. Halbert v. Green, 293 S.W.2d 848, 851 (Tex. l956); Breen v. Morehead, 126 S.W. 650, 656 (Tex. App. 1910), aff’d, 136 S.W. 1047 (Tex. 1911). A grantee under a quitclaim deed is charged with notice of outstanding claims against the property and is not protected as an innocent purchaser for value. Cook, 174 S.W. at 1095; Threadgill v. Bickerstaff, 29 S.W. 757, 758–59 (Tex. 1895). The foregoing is true even if the quitclaim deed is from a remote grantor in the grantee’s chain of title and not from the grantee’s grantor. Houston Oil Co. v. Niles, 255 S.W. 604, 610 (Tex. Comm’n App. 1923, judgm’t adopted).
COMMENT: An ideal use of a quitclaim deed would be to extinguish any claim for economic contribution or reimbursement one spouse might have against the separate property of the other spouse.
§ 24.6Mineral Royalty Interests
Grants and reservations in Texas are styled “oil, gas, and other minerals” or “all minerals in and under the land.” Although the meanings of “oil” and “gas” are usually clear, adjudication has been required to determine what minerals are included in a conveyance of “minerals.” The Supreme Court of Texas has held that “a severance of minerals in an oil, gas and other minerals clause includes all substances within the ordinary and natural meaning of the word, whether their presence or value is known at the time of severance.” Moser v. U.S. Steel Corp., 676 S.W.2d 99, 102 (Tex. 1984). A royalty is the nonpossessory right to receive a cost-free share of production. Many oil companies require changes in ownership to be set forth in a preprinted document called a “division order,” which is available from the company.
A “timeshare plan” is any arrangement, plan, scheme, or similar method (excluding an exchange program but including a membership agreement, sale, lease, deed, license, or right-to-use agreement) by which the purchaser, in exchange for consideration, receives an ownership right in or the right to use accommodations for a period of time less than a year during a given year, but not necessarily consecutive years. Tex. Prop. Code § 221.002(28). Once the timeshare plan is established, each timeshare interest may be separately conveyed or encumbered, and the title is recordable. Tex. Prop. Code § 221.012. A “timeshare interest” is a timeshare estate (an arrangement under which the purchaser receives a right to occupy a timeshare property and an estate interest in the real property) or timeshare use (an arrangement under which the purchaser receives a right to occupy a timeshare property but not an estate interest in the timeshare property). Tex. Prop. Code § 221.002(24), (25), (30).
A general assignment of interest (see form 24-16 in this manual) should be sufficient to transfer ownership interest in cemetery lots, interment rights, and merchandise.
[Sections 24.9 and 24.10 are reserved for expansion.]
II. Real Estate—Debt and Security Instruments
Purpose of Instrument: The real estate lien note represents the maker’s personal obligation to repay the debt. It sets out the terms and conditions of repayment, such as when and where payments are to be made and the interest rate.
“Negotiable Instrument”: Ideally, real estate lien notes should be drafted to qualify as “negotiable instruments” under article 3 of the Uniform Commercial Code. To be a negotiable instrument, a promissory note must (1) contain an unconditional promise to pay a fixed sum of money (with or without interest or other charges described in the note); (2) be payable to “order” (for example, “pay to the order of Mary Smith”) or to “bearer”; (3) be payable on demand or at a definite time; and (4) not state any other undertaking or instruction by the obligor to do anything besides pay money.
The following provisions do not affect negotiability:
1.An undertaking by the obligor to give, maintain, or protect collateral.
2.A reference to another document (form 24-19 in this manual, for example, refers to the divorce decree).
3.An authorization of the holder to confess judgment or realize on or dispose of collateral.
4.A waiver of the benefit of any law intended to benefit the obligor.
Tex. Bus. & Com. Code §§ 3.104(a), 3.106; see also Tex. Bus. & Com. Code §§ 3.108, 3.109.
If the note’s due date is determined by a future act, such as a spouse’s remarriage or cohabitation, a sale of the property, or a child’s death, the note will not qualify as a “negotiable instrument.” The terms of the note will, however, be enforceable to the extent they could have been enforced in a pure contract action. If the holder of the note contemplates transferring it to a third party, such as an investor who buys promissory notes, this lack of negotiability will at least impair its value to that third party.
“Holder in Due Course”: The primary advantage of negotiability is that only holders of negotiable instruments may benefit from the protection of holder-in-due-course status. The requirements for holder-in-due-course status are found at Business and Commerce Code section 3.302(a). See Tex. Bus. & Com. Code § 3.302(a). Holders in due course take the note free of all defenses to its enforcement except—
1.infancy of the obligor to the extent it is a defense to a simple contract;
2.duress, lack of legal capacity, or illegality of the transaction that, under other law, nullifies the obligation of the obligor;
3.fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms; or
4.discharge of the obligor in insolvency proceedings.
Tex. Bus. & Com. Code § 3.305(a), (b).
Unless the holder of the note qualifies for holder-in-due-course status, he is subject to any claim or defense the obligor may raise to a simple contract, such as failure of consideration, waiver, estoppel, undue influence, or accord and satisfaction, as well as a claim in recoupment against the original payee of the note. See Tex. Bus. & Com. Code § 3.305(a), (b).
Usury: The real estate lien note found at form 24-6 in this manual contains a usury savings clause (the paragraph beginning “Interest on the debt evidenced by this note will not exceed the maximum rate or amount of nonusurious interest . . .”). Texas courts have favored and enforced usury savings clauses. See Woodcrest Associates v. Commonwealth Mortgage Corp., 775 S.W.2d 434, 437–38 (Tex. App.—Dallas 1989, writ denied). Nonetheless, a usury savings clause will not protect the holder from a usury claim in which the interest rate stated in the note exceeds the statutory ceiling. See Tex. Fin. Code ch. 303 et seq. Finance Code chapter 303 sets the ceiling rates for loans on written contracts, including promissory notes. If a creditor contracts for, charges, or receives interest in excess of the statutory ceiling amount in connection with a transaction for personal, family, or household use, the statutory penalty is three times the amount of interest contracted for, charged, or received in excess of the allowable amount, except that the penalty cannot be less than the lesser of $2,000 or 20 percent of the principal; if the interest charged and received is more than double the maximum amount, the creditor also forfeits all principal on which the interest is charged and received and the interest and all other amounts charged and received. Tex. Fin. Code §§ 305.001(a), 305.002. The creditor is also liable for reasonable attorney’s fees. Tex. Fin. Code § 305.005.
In subsequent negotiations or proceedings to enforce the note or the underlying transaction, the attorney should take care not to demand any amount not specifically allowed in the loan documents, such as a late charge, because such a demand also might constitute usury. See Augusta Development Co. v. Fish Oil Well Servicing Co., 761 S.W.2d 538, 542 (Tex. App.—Corpus Christi–Edinburg 1988, no writ); Moore v. Sabine National Bank, 527 S.W.2d 209, 213–14 (Tex. App.—Austin 1975, writ ref’d n.r.e.).
Effect: A deed of trust is merely a security instrument and does not convey title to land, although words of conveyance are usually used. Fleming v. Adams, 392 S.W.2d 491, 495 (Tex. App.—Houston 1965, writ ref’d n.r.e.). The mortgagee is not the owner and is not entitled to possession, rentals, or profits. Taylor v. Brennan, 621 S.W.2d 592, 593 (Tex. 1981). To be effective, the deed of trust must be delivered to the grantee. Delivery may be established by the filing of the deed of trust for record in the proper office by the grantor on the request of or with the consent of the grantee. West v. First Baptist Church, 71 S.W.2d 1090, 1099 (Tex. 1934).
Description: The deed of trust must contain “the nucleus of description” that will allow the land to be identified with reasonable certainty. Jones v. Mid-State Homes, Inc., 356 S.W.2d 923, 925 (Tex. 1962); Crow v. Davis, 435 S.W.2d 176, 178 (Tex. App.—Waco 1968, writ ref’d n.r.e.). Ambiguities in the deed of trust may be explained by parol evidence as long as the parol evidence does not contradict the language in the deed of trust. Jasper State Bank v. Goodrich, 107 S.W.2d 600, 603 (Tex. App.—Beaumont 1937, writ dism’d).
Existence of Debt: The existence of a debt is essential to the validity of a deed of trust or mortgage, the deed of trust or mortgage being incident to the note. West, 71 S.W.2d at 1098; Rutland Savings Bank v. Seeger, 125 S.W.2d 1113, 1115 (Tex. App.—Galveston 1939, writ dism’d judgm’t cor.).
Priority of Liens: Generally, different liens on the same property have priority according to the time of their creation; that is, “first in time is first in right.” Windham v. Citizens National Bank, 105 S.W.2d 348, 351 (Tex. App.—Austin 1937, writ dism’d). Even though a lien may attach prior in time to a later lien, the prior lien will be void as to the subsequent lien if the prior lien instrument was not acknowledged, sworn to, or proved and recorded and the subsequent lienholder acquired his lien for a valuable consideration without notice of the prior lien. Tex. Prop. Code § 13.001(a). Moreover, when a lienholder has on the date his lien attaches actual or constructive notice of an inchoate security interest in the property, his lien will be secondary to that security interest when it ripens into an effective lien. For example, a recorded deed of trust to secure future indebtedness will be a prior and superior lien to either a sale or encumbrance occurring after the deed of trust was recorded but before the incurring of indebtedness referred to in the deed of trust. Jolly v. Fidelity Union Trust Co., 15 S.W.2d 68, 70–71 (Tex. App.—Fort Worth 1929, writ ref’d).
§ 24.13Deed of Trust to Secure Assumption
In the context of division of property on divorce, the party referred to as the buyer in the following discussion is the spouse who is awarded real property and assumes the debt, and the seller is the other spouse.
A deed of trust to secure assumption may be used if the buyer assumes payment of a debt for which the seller is liable at the time of sale. If this instrument is used under these circumstances, the seller usually conveys title by deed with a vendor’s lien reserved. The assumed debt and lien are evidenced by a note and deed of trust. The deed of trust to secure assumption provides that the lien it creates is released with the release of the prior deed of trust, unless before the release the seller files a notice with the proper county clerk setting forth any amount the seller has advanced to cure a default in payment of the assumed lien.
The primary function of the deed of trust to secure assumption is to give the seller recourse against the property if the buyer defaults in payment of the debt secured by the first lien.
In a transaction involving the deed of trust to secure assumption the buyer is the grantor in the deed of trust to secure assumption and the grantee in the special warranty deed. The seller is the grantor in the warranty deed, the lender in the deed of trust to secure assumption, and usually the borrower in the note and grantor in the deed of trust assumed. The deed should contain an assumption clause and a clause for vendor’s lien and deed of trust to secure assumption.
Deed of Trust to Secure Assumption without Maturity Date: The deed of trust to secure assumption without maturity date (form 24-7 in this manual) should be used when the buyer does not have a deadline to pay off the assumed debt by refinancing the loan solely in the buyer’s name, selling the property, or some other means.
Deed of Trust to Secure Assumption with Maturity Date: The deed of trust to secure assumption with maturity date (form 24-37 in this manual) should be used when the buyer has a deadline to refinance the loan solely in the buyer’s name or pay off the loan by sale of the property or some other means. This form includes a maturity date of the assumption and forces the buyer to pay off the assumed loan by a certain date. If the buyer does not pay off the assumed loan or refinance it by the maturity date, the buyer will face foreclosure. Use of the deed of trust to secure assumption with maturity date should be considered carefully for each situation. The following factors may be particularly relevant: (1) the domicile of each party and any geographic restrictions; (2) the ability of the buyer to refinance the loan by the maturity date; (3) children living in the school district; and (4) stability of the parent-child relationship.
§ 24.14Foreclosure and Sale under Deed of Trust
When Authorized: The power of sale given a trustee in a deed of trust is considered a harsh remedy and may be exercised only by strictly complying with the terms and conditions of the note and those imposed on the power of sale by the maker of the trust instrument. Purnell v. Follett, 555 S.W.2d 761, 763 (Tex. App.—Houston [14th Dist.] 1977, no writ). A sale is authorized only on default by the debtor. Ford v. Emerich, 343 S.W.2d 527, 531 (Tex. App.—Houston 1961, writ ref’d n.r.e.). A tender of arrearages due on a deed of trust containing an acceleration clause, before exercise by the holder of the deed of trust of his option to declare the entire debt due, prevents the exercise of acceleration. Hiller v. Prosper Tex, Inc., 437 S.W.2d 412, 415 (Tex. App.—Houston [1st Dist.] 1969, no writ).
How Exercised: When the power of sale is validly exercised under the deed of trust, the sale must be made at a public auction held between 10:00 a.m. and 4:00 p.m. of the first Tuesday of a month (or the first Wednesday, if the first Tuesday occurs on January 1 or July 4). The sale must be made at the county courthouse or other place designated by the county’s commissioners court in the county in which the real estate is located. If the property is located in more than one county, the sale may be made at the courthouse or other designated place in any county in which the property is located. The commissioners court shall designate the area at the courthouse or other designated place where the sales are to take place and shall record the designation in the real property records of the county. The sale must occur in the designated area. If no area is designated by the commissioners court, the notice of sale must designate the area where the sale covered by that notice is to take place, and the sale must occur in that area. Tex. Prop. Code § 51.002(a), (a–1), (h).
Notice of the proposed sale, which must include a statement of the earliest time at which the sale will begin, must be given at least twenty-one days before the date of the sale. This notice must be given by a proper notice posted at the courthouse door of each county in which the property is located, designating the county in which the property will be sold; by a copy of the notice filed in the office of the county clerk in each such county; and by service of written notice of the sale by certified mail on each debtor. Tex. Prop. Code § 51.002(b). If the county maintains an Internet website, the county must post a notice of sale filed with the county clerk on the website on a page that can be viewed by the public without charge or registration. Tex. Prop. Code § 51.002(f–1). If the courthouse or the clerk’s office is closed because of inclement weather, natural disaster, or other act of God, the posting or filing may be made up to forty-eight hours after the court or office reopens for business. Tex. Prop. Code § 51.002(b–1). The entire calendar day on which the notice of sale is given, regardless of the time of day at which it is given, is included in computing the twenty-one-day notice period, and the entire calendar day of the foreclosure sale is excluded. Tex. Prop. Code § 51.002(g). The sale must begin at the time stated in the notice of sale or not later than three hours after that time. Tex. Prop. Code § 51.002(c).
Notwithstanding any agreement to the contrary, the mortgage servicer of the debt shall serve a debtor in default under a deed of trust or other contract lien on real property used as the debtor’s residence with written notice by certified mail stating that the debtor is in default under the deed of trust or contract lien and giving the debtor at least twenty days to cure the default before notice of sale can be given under Property Code section 51.002(b). The entire calendar day on which the notice to the debtor is given, regardless of the time of day at which the notice is given, is included in computing the twenty-day notice period, and the entire calendar day on which notice of sale is given under section 51.002(b) is excluded. Tex. Prop. Code § 51.002(d). Service of the notice by certified mail is completed when the notice, with postage prepaid and addressed to the debtor at the last known address, is deposited with the United States Postal Service. The affidavit of a person having knowledge of the facts to the effect that service was completed is prima facie evidence of service. Tex. Prop. Code § 51.002(e). The purpose of this statute is to provide a minimum level of protection for the debtor. Hausmann v. Texas Savings & Loan Ass’n, 585 S.W.2d 796, 799 (Tex. App.—El Paso 1979, writ ref’d n.r.e.).
Mortgagee’s Entitlement: After a valid trustee’s sale, the mortgagee is entitled to judgment for the amount of the note, interest, and attorney’s fees, less the amount received at the trustee’s sale and other legitimate credits. Tarrant Savings Ass’n v. Lucky Homes, Inc., 390 S.W.2d 473, 475 (Tex. 1965).
Effect of Lack of Recordation: A conveyance of real property is void as to a creditor or to a subsequent purchaser for a valuable consideration without notice unless the instrument has been acknowledged, sworn to, or proved and filed for record. Tex. Prop. Code § 13.001(a). Therefore, a purchaser of land for value and without notice acquires title to the property as against a person claiming under a deed that has not been filed for record as required by law. See Reserve Petroleum Co. v. Hutcheson, 254 S.W.2d 802, 805 (Tex. App.—Amarillo 1952, writ ref’d n.r.e.). The same rule applies to a judgment creditor as to a perfected judgment lien against the grantor of an unrecorded deed—the lien will prevail over the unrecorded deed as long as the lien creditor did not have notice of the deed. Paris Grocer Co. v. Burks, 105 S.W. 174, 175 (Tex. 1907). An unrecorded instrument is binding, however, on a party to the instrument, the party’s heirs, and a subsequent purchaser who does not pay a valuable consideration or who has notice of the instrument. Tex. Prop. Code § 13.001(b).
Similarly, all deeds of trust and mortgages are void as to creditors and subsequent purchasers for valuable consideration without notice, unless they have been acknowledged, sworn to, or proved and filed for record as required by law. Tex. Prop. Code § 13.001(a). Accordingly, the holder of a subsequent lien who does not have actual notice of a prior unrecorded lien has priority over the prior unrecorded lien. Gordon-Sewall & Co. v. Walker, 258 S.W. 233, 237 (Tex. App.—Beaumont 1924, writ dism’d w.o.j.).
Grantee’s Address: A deed or other conveyance conveying an interest in real property executed after December 31, 1981, must contain the mailing address of each grantee appearing on the document itself or in a separate instrument signed by the grantor or grantee and attached to the document. Although failure to include the address does not affect the validity of the conveyance as between the parties, a failure to include it results in a penalty filing fee equal to the greater of twice the statutory recording fee or $25. Tex. Prop. Code § 11.003.
Place of Recording: To be effectively recorded, the deed or other conveyance must be eligible for recording and must be recorded in the county in which a part of the property is located. Tex. Prop. Code § 11.001(a).
§ 24.16Homestead Exemption and Equitable Liens
The only valid liens that may be placed on the homestead are—
1.those liens for all or part of the purchase money for the homestead;
2.taxes due on the homestead;
3.an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of the family homestead in a divorce proceeding;
4.the refinancing of a lien against the homestead, including a federal tax lien resulting from the tax debt of both spouses, if the homestead is a family homestead, or from the tax debt of the owner;
5.work and material used in constructing new improvements on the homestead contracted for in writing and work and material used to repair or renovate existing improvements contracted for in writing with the proper consent of both spouses, if certain formal requirements are met;
6.certain extensions of credit (or extensions of credit that meet various requirements) commonly known as home equity loans;
7.reverse mortgages; and
8.the conversion and refinance of a personal property lien secured by a manufactured home to a lien on real property, including the refinance of the purchase price of the manufactured home, the cost of installing the manufactured home on the real property, and the refinance of the purchase price of the real property.
Tex. Const. art. XVI, § 50(a); see also Tex. Prop. Code § 41.001(b).
A homestead is subject to division in a divorce case, and the court has the authority to award one party the homestead and the other a judgment for a sum of money found by the court to represent the fair value of his or her interest in the homestead and to grant a lien to secure the judgment. Brunell v. Brunell, 494 S.W.2d 621, 623 (Tex. App.—Dallas 1973, no writ). The court may order one spouse to execute a general warranty deed to the spouse who will receive the homestead and order the spouse receiving the homestead to execute a note evidencing the deferred payments and a deed of trust securing payment of the note. Ex parte McKinley, 578 S.W.2d 437, 438 (Tex. App.—Houston [1st Dist.] 1979, orig. proceeding).
Even if the property in question is the separate property of one spouse, the court may award a judgment for reimbursement for community funds spent on the property and secure the judgment with an equitable lien. Day v. Day, 610 S.W.2d 195, 198 (Tex. App.—Tyler 1980, writ ref’d n.r.e.); Smith v. Smith, 187 S.W.2d 116, 120 (Tex. App.—Fort Worth 1945, no writ); see also Tex. Fam. Code § 3.406. But see Heggen v. Pemelton, 836 S.W.2d 145, 148 (Tex. 1992) (judgment cannot be secured by lien on separate-property homestead of one spouse unless specifically allowed under Texas Constitution).
Care must be taken in perfecting a lien that may be foreclosed against the homestead. The instruments creating the lien must establish that it falls within one of the constitutional and statutory exceptions discussed above and how much of the property falls within the exception. See McGoodwin v. McGoodwin, 671 S.W.2d 880, 881 (Tex. 1984); Sayers v. Pyland, 161 S.W.2d 769, 771 (Tex. 1942).
§ 24.17Separate Property and Equitable Liens
When dividing marital property, trial courts may impose equitable liens on one spouse’s separate property to secure the other spouse’s claim for economic contribution or right of reimbursement for community improvements to that property. Heggen v. Pemelton, 836 S.W.2d 145, 146 (Tex. 1992); Sheshtawy v. Sheshtawy, 150 S.W.3d 772, 779 (Tex. App.—San Antonio 2004, pet. denied). Trial courts may not impress reimbursement liens simply to ensure a just and right division. Heggen, 836 S.W.2d at 146.
On dissolution of a marriage, the court may impose an equitable lien on the property of a benefited marital estate to secure a claim for reimbursement against that property by a contributing marital estate. Tex. Fam. Code § 3.406(a).
One of the inherent rights of a cotenant is that, if the commonly owned property cannot be divided into equal shares without materially injuring its value, it may be divided into unequal shares and a lien be fixed for the difference against the larger share in favor of the recipient of the smaller share. Each cotenant has this valuable right, because otherwise the property might have to be sacrificed on an unfavorable market. The difference is usually referred to as owelty. The owelty so assessed is recognized as being in the nature of purchase money secured by a vendor’s lien on the larger tract. Sayers v. Pyland, 161 S.W.2d 769, 772 (Tex. 1942).
The Texas Constitution and the Texas Property Code permit the forced sale of a homestead to collect a debt for “an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of a family homestead in a divorce proceeding.” Tex. Const. art. XVI, § 50(a)(3); Tex. Prop. Code § 41.001(b)(4).
A lien may therefore be placed on a spouse’s homestead to secure payment of an amount awarded to the other spouse, but the amount secured is limited to the amount of the homestead interest awarded to the other spouse. Cole v. Cole, 880 S.W.2d 477 (Tex. App.—Fort Worth 1994, no writ); Smith v. Smith, 836 S.W.2d 688, 693 (Tex. App.—Houston [1st Dist.] 1992, no writ); Wren v. Wren, 702 S.W.2d 250, 252 (Tex. App.—Houston [1st Dist.] 1985, writ dism’d); Wierzchula v. Wierzchula, 623 S.W.2d 730, 732 (Tex. App.—Houston [1st Dist.] 1981, no writ). The lien may be imposed only for the specific amount that is to be paid. Crockett v. McSwain, No. 11-00-00374-CV, 2001 WL 34373604 (Tex. App.—Eastland Nov. 1, 2001, no pet.) (not designated for publication).
[Sections 24.19 and 24.20 are reserved for expansion.]
The owner designated on the title must transfer the ownership of the title in a manner prescribed by the Texas Department of Motor Vehicles that certifies that the purchaser is the owner of the vehicle and certifies that there are no liens or provides a release of each lien on the vehicle. Tex. Transp. Code § 501.071. For most vehicles less than ten years old, the transferor must also give the transferee a written disclosure of the odometer reading at the time of transfer in accordance with 49 U.S.C. § 32705. This disclosure must be made on a prescribed form that includes space for the signature and printed name of both transferor and transferee. Tex. Transp. Code § 501.072; see 49 C.F.R. § 580.3. The form currently appears on the reverse side of the certificate of title.
While the simplest method of transfer is to have the transferor execute the form on the back of the certificate of title, the transfer may also be accomplished with a power of attorney executed by the transferor, authorizing the attorney-in-fact designated in the power to transfer the vehicle. The transferee then files the signed certificate of title or power of attorney (if the assignment on the certificate of title was not executed by the transferor) with the county tax assessor-collector not later than thirty days after the assignment. Tex. Transp. Code § 501.145.
The transferee must present personal identification when applying for a new title using the form prescribed by the Department of Motor Vehicles. Tex. Transp. Code §§ 501.023, 501.0235. In order to establish personal identification, the transferee/applicant must present a current photo identification document that must be one of the nine documents specified by the Department, which include a driver’s license, state identification certificate, and United States passport. Then, after the required fees are paid, the county tax assessor-collector issues a title receipt to the transferee, which authorizes the transferee to operate the motor vehicle until the title is issued. Tex. Transp. Code § 501.024.
A certified copy of the decree of divorce can also be used to transfer the title of the vehicle to the party awarded the vehicle, provided that the vehicle is specifically described in the decree by make, year, and vehicle identification number. See Tex. Transp. Code § 501.074(a). In some circumstances, an application for title may also be required.
The Texas Tax Code provides for the imposition of taxes for certain transfers of motor vehicles. The tax is imposed on the sale of motor vehicles, on motor vehicles brought into the state by new Texas residents, on even exchanges of motor vehicles, and on most gifts of motor vehicles. See Tex. Tax Code §§ 152.021–.025.
COMMENT: Because the transfer of a motor vehicle in a divorce case is considered a transfer by court order, there should be no tax on the transfer.
§ 24.22Motorboats, Jet Skis, and Outboard Motors
State-Registered Boats, Jet Skis, and Motors: Transfer of motorboats and outboard motors registered in Texas is handled by the Texas Department of Parks and Wildlife. The application for a certificate of title requires detailed information. See Tex. Parks & Wild. Code § 31.047(b). The application to transfer title to a boat is Texas Department of Parks and Wildlife form PWD 143. The application to transfer title to an outboard motor is form PWD 144. The form to transfer title to a boat with an inboard motor is PWD 143. Both forms may be downloaded at http://tpwd.texas.gov/fishboat/boat/forms/. The application must be accompanied with other evidence reasonably required by the department to establish entitlement of ownership to transfer a motorboat, jet ski, or outboard motor. A judgment of a court of competent jurisdiction with an affidavit evidencing ownership and reciting the required language is sufficient. Tex. Parks & Wild. Code § 31.047(c). Transfer of ownership pursuant to a divorce is a nontaxable event as long as the motorboat or outboard motor is used, not new.
U.S.–Registered Boats: Vessels that are U.S. Coast Guard–documented vessels are documented by the assignment by the U.S. Coast Guard of an official number and a certificate of documentation. The Coast Guard requires the applicant to submit an “Application for Initial Issue, Exchange or Replacement of Certificate of Documentation; Redocumentation,” form CG-1258. The applicant must include a certified copy of the decree if the transfer is pursuant to a divorce or a “Bill of Sale,” form CG-1340. The decree of divorce should include the make, model, hull number, and name of vessel to ensure transfer of a documented vessel pursuant to a divorce.
A title is required for all motor vehicles operated on a public highway in Texas. Tex. Transp. Code § 501.022(a). However, a trailer is not a motor vehicle unless it weighs more than four thousand pounds. Tex. Transp. Code § 501.002(14)(B). Even though a title may not be required, the owner must register a trailer if it is to be used on a public highway in Texas. Tex. Transp. Code § 502.002.
House trailers and camper trailers less than eight feet in width and less than forty feet in length and designed for use as temporary living quarters are classified as travel trailers and must be registered and titled regardless of weight. Tex. Transp. Code § 502.166. According to personnel of the Texas Department of Transportation, the procedure for the transfer of title to a travel trailer is the same as that for the transfer of title to a motor vehicle. The term house trailer means a trailer designed for human habitation and does not include manufactured housing. Tex. Transp. Code § 501.002(6).
The term manufactured housing refers to a structure that is transportable in one or more sections, and that, in the traveling mode, is or more than eight feet wide or forty or more feet in length or, when erected on site, is at least 320 square feet. If the housing was constructed before June 15, 1976, it is called a “mobile home.” If it was constructed after that date, it is called a “HUD-code manufactured home.” See Tex. Occ. Code § 1201.003(12), (20).
The Texas Department of Housing and Community Affairs (TDHCA) administers the Texas Manufactured Housing Standards Act, chapter 1201 of the Texas Occupations Code. See Tex. Occ. Code § 1201.001 et seq. Subchapters A through E detail the election process for when an owner of a manufactured home applies for a statement of ownership. Specifically, in completing an application for the issuance of a statement of ownership, an owner of a manufactured home shall indicate whether the owner elects to treat the home as real property. An owner may elect to treat a manufactured home as real property only if the home is attached to real property that is owned by the owner of the home or land leased to the owner of the home under a long-term lease. Tex. Occ. Code § 1201.2055(a).
If an owner elects to treat a manufactured home as real property, TDHCA shall issue to the owner a copy of the statement of ownership reflecting the real property election on its face. Within sixty days of the issuance of the statement, the owner must file the copy in the real property records of the county in which the home is located and notify TDHCA and the tax assessor-collector that the copy has been filed. The manufactured home is not considered to be real property until the copy has been filed and TDHCA and the tax assessor-collector have been notified as required. After a real property election is perfected, the home is considered to be real property for all purposes; no additional issuance of a statement of ownership is required with respect to the manufactured home unless the home is moved from the location specified on the statement of ownership, the real property election is changed, or the use of the property is changed. Tex. Occ. Code § 1201.2055(d)–(g).
Email updates of changes to manufactured housing law and rules are available at www.tdhca.state.tx.us/mh/index.htm.
Registration of an aircraft is handled by the Aircraft Registration Branch of the Federal Aviation Administration. An aircraft registration application, AC form 8050-1, may be obtained from FAA Aircraft Registration Branch by calling 405-954-3116 or writing to FAA Aircraft Registration Branch, AFS-750, P.O. Box 25504, Oklahoma City, OK 73125-0504. Original applications, not photocopies or computer-generated copies, are required. The applicant’s physical location or physical address must be given. Evidence of ownership, such as AC form 8050-2 (aircraft bill of sale) or its equivalent, must be provided and meet the requirements prescribed in part 47 of the Federal Aviation Regulations. If the applicant did not purchase the aircraft from the last registered owner, the applicant must submit conveyances completing the chain of ownership from the registered owner to the applicant. A certified copy of a decree of divorce should suffice to complete the chain of ownership.
The following organizations should be contacted regarding the transfer of the following types of animals:
Dogs: American Kennel Club, 260 Madison Ave., New York City, NY 10016, 212-696-8200, www.akc.org.
Cats: The Cat Fanciers’ Association, Inc., P.O. Box 1005, Manasquan, NJ 08736-0805, 732-528-9797, https://cfa.org.
Horses: Thoroughbreds: The Jockey Club, Registry Office, 821 Corporate Drive, Lexington, KY 40503-2794, 859-224-2700, www.jockeyclub.com; Arabians: Arabian Horse Association (part and purebred), 10805 East Bethany Drive, Aurora, CO 80014, 303-696-4500, www.arabianhorses.org; Quarter Horses: American Quarter Horse Association, P.O. Box 200, Amarillo, TX 79168, 806-376-4811, www.aqha.com; Palominos: Palomino Horse Breeders of America, 15253 Skelly Drive, Tulsa, OK 74116-2620, 918-438-1234, www.palominohba.com; Appaloosas: Appaloosa Horse Club, P.O. Box 8403, Moscow, ID 83843, 208-882-5578, www.appaloosa.com.
Cattle: Brahman: American Brahman Breeders Association, 3003 South Loop West, Suite 140, Houston, TX 77054, 713-349-0854, https://brahman.org; Beefmaster: Beefmaster Breeder’s United, 6800 Park Ten Blvd., Suite 290W, San Antonio, TX 78213, 210-732-3132, https://beefmasters.org; Angus: American Angus Association, 3201 Frederick Ave., St. Joseph, MO 64506, 816-383-5100, www.angus.org; Longhorns: Texas Longhorn Breeders Association of America, 2315 North Main Street, Suite 402, Fort Worth, TX 76106, 817-625-6241, www.tlbaa.org.
Stock Held by Brokerage Firm: The transfer of outstanding shares of stock is ordinarily handled by a transfer agent. Transferring stock held in the vault by a brokerage firm, known as held in “safekeeping,” is accomplished in the same way as certificated stock is transferred, as set out below. If the stock certificate is held in a “street name” and the actual certificate is not available, the transfer can be accomplished by written request from the transferor to the broker, such as a letter of authorization or “L.O.A.”
Certificated Stocks: Two steps are necessary to transfer certificated stock: endorsement and delivery. Endorsement occurs when the transferor signs the back of the certificate or a separate “stock power” indicating a transfer of the security. To complete the transfer, delivery of the certificate and the stock power, if one is used, is necessary. To transfer stock held in safekeeping by a brokerage firm, the transferor must execute a transfer document, such as a stock power, and sign his or her name on the stock power exactly as it appears on the account or actual stock certificate. The agent will usually require that the signature of endorsement be guaranteed by a responsible institution, such as a national bank or member of the stock exchange. The transfer agent forwards the certificate or stock power and/or letter of authorization to a registrar, who cancels the old certificates, countersigns new ones, and forwards them to the transfer agent.
Chapter 8 of the Texas Business and Commerce Code deals with the issuance, purchase, and registration of investment securities.
For a discussion of the disposition of retirement benefits, see chapter 25 of this manual.
There are no specific documents required to transfer a promissory note. Generally, a written assignment acknowledged by the assignor in the presence of a notary public is sufficient. Whether a transferred note qualifies as a negotiable instrument, giving the transferee special status as a holder in due course, is discussed in section 24.11 above.
A “security agreement” is an agreement that creates or provides for a security interest. Tex. Bus. & Com. Code § 9.102(a)(74). A “security interest” is an interest in personal property or fixtures that secures payment or performance of an obligation. Tex. Bus. & Com. Code § 1.201(b)(35). “Collateral” means the property subject to a security interest. Tex. Bus. & Com. Code § 9.102(a)(12). “Debtor” means the person who has a property interest, other than a security interest or other lien, in the collateral. Tex. Bus. & Com. Code § 9.102(a)(28)(A). “Obligor” means the person who owes payment or other performance of the obligation secured. Tex. Bus. & Com. Code § 9.102(a)(60)(i). “Secured party” means the person in whose favor there is a security interest. Tex. Bus. & Com. Code § 9.102(a)(73)(A).
§ 24.31:2Classifications of Collateral
A security interest may be granted in the following types of collateral:
1.Accounts—a right to payment of a monetary obligation for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, for services rendered or to be rendered, and for other listed items, if not evidenced by chattel paper or an instrument. Tex. Bus. & Com. Code § 9.102(a)(2).
2.Chattel paper—a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, or a lease of specific goods. Tex. Bus. & Com. Code § 9.102(a)(11).
3.Commercial tort claim—a claim arising in tort if the claimant is an organization or if the claimant is an individual and the claim arose in the course of the claimant’s business or profession and does not include damages arising out of personal injury or death. Tex. Bus. & Com. Code § 9.102(a)(13).
4.Deposit account—a demand, time, savings, passbook, or similar account maintained with a bank, including a nonnegotiable certificate of deposit. Tex. Bus. & Com. Code § 9.102(a)(29).
5.Documents—documents of title, such as bills of lading, dock warrants, dock receipts, warehouse receipts, or orders for the delivery of goods. Tex. Bus. & Com. Code §§ 1.201(b)(16), 7.201, 9.102(a)(30).
6.Instrument—a negotiable instrument, such as a draft, check, or certificate of deposit, or any other writing evidencing a right to the payment of money that, in the ordinary course of business, is transferred by delivery with any necessary indorsement or assignment. Tex. Bus. & Com. Code §§ 3.104(b), 9.102(a)(47).
7.Investment property—a certificated or uncertificated security (Tex. Bus. & Com. Code § 8.102(a)(15)); a security entitlement (Tex. Bus. & Com. Code § 8.102(a)(17)); a securities account (Tex. Bus. & Com. Code § 8.501); a commodity contract (Tex. Bus. & Com. Code § 9.102(a)(15)); or a commodity account (Tex. Bus. & Com. Code § 9.102(a)(14)). Tex. Bus. & Com. Code § 9.102(a)(49).
8.Letter-of-credit right—a right to payment or performance under a letter of credit. Tex. Bus. & Com. Code § 9.102(a)(51).
9.General intangibles—personal property (including things in action) other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. General intangibles include payment intangibles (a general intangible under which the account debtor’s principal obligation is to pay money, Tex. Bus. & Com. Code § 9.102(a)(62)) and software (a computer program and supporting information, but not when it constitutes goods, Tex. Bus. & Com. Code § 9.102(a)(76)). Tex. Bus. & Com. Code § 9.102(a)(42).
10.Promissory note—an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain a bank’s acknowledgment of receipt of money or funds for deposit. Tex. Bus. & Com. Code § 9.102(a)(66).
11.Health-care insurance receivable—an interest in or claim under an insurance policy that is a right to payment of a monetary obligation for health-care goods or services provided or to be provided. Tex. Bus. & Com. Code § 9.102(a)(46).
12.Equipment—goods that are not consumer goods, inventory, or farm products. Tex. Bus. & Com. Code § 9.102(a)(33). (“Goods” are all things that are movable when a security interest attaches, including certain embedded software. Tex. Bus. & Com. Code § 9.102(a)(44).)
13.Consumer goods—goods used or bought for use primarily for personal, family, or household purposes. Tex. Bus. & Com. Code § 9.102(a)(23).
14.Farm products—crops, livestock, supplies produced or used in farming operations, or products of crops or livestock in their unmanufactured states (for example, ginned cotton, wool-clip, maple syrup, milk, and eggs), with respect to which the debtor is engaged in farming operations. Tex. Bus. & Com. Code § 9.102(a)(34), (a)(35).
15.Inventory—goods, other than farm products, that are leased; that are held by a person for sale or lease or to be furnished under contracts of service or that the person has so furnished; or that are raw materials, work in process, or materials used or consumed in a business. Tex. Bus. & Com. Code § 9.102(a)(48).
§ 24.31:3Description of Collateral
Any description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described. Tex. Bus. & Com. Code § 9.108(a). A description by collateral type alone is not sufficient if the collateral is a commercial tort claim or, in a consumer transaction, if the collateral is consumer goods, a security entitlement, a securities account, or a commodity account. Tex. Bus. & Com. Code § 9.108(e). A description of collateral as “all the debtor’s assets” or “all the debtor’s personal property” or some such phrase does not reasonably identify the collateral in a security agreement, although such a description is sufficient in a financing statement. Tex. Bus. & Com. Code §§ 9.108(c), 9.504.
A security interest attaches when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment. Tex. Bus. & Com. Code § 9.203(a). Generally, a security interest may be enforced against the debtor and third parties only if—
1.value has been given;
2.the debtor has rights in the collateral or the power to transfer such rights to a secured party; and
3.one of these conditions is met:
a.the debtor has authenticated a security agreement describing the collateral (and, if the collateral includes timber to be cut, describes the land concerned);
b.the collateral is not a certificated security and is in the secured party’s possession under Business and Commerce Code section 9.313 pursuant to the security agreement;
c.the collateral is a certificated security and the security certificate has been delivered to the secured party under Business and Commerce Code section 8.301 pursuant to the security agreement; or
d.the collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents and the secured party has control under Business and Commerce Code section 7.106, 9.104, 9.105, 9.106, or 9.107 pursuant to the security agreement.
Tex. Bus. & Com. Code § 9.203(b).
§ 24.31:5Perfecting Security Interest
An attached security interest is effective between the parties, but it must be perfected to be effective against third parties. Only an attached security interest may be perfected. Tex. Bus. & Com. Code § 9.308(a). For a specific category of collateral, there may be several ways to perfect a security interest or only one. The basic methods of perfection are filing a properly completed financing statement, possession, and control. A few types of security interests are perfected on attachment. See Tex. Bus. & Com. Code § 9.309.
Filing Financing Statement: Filing a properly completed financing statement in the appropriate UCC filing office is the only method of perfecting a security interest in accounts, a commercial tort claim, and general intangibles, except for a security interest arising out of certain sales of accounts or payment intangibles. Filing is an alternative method to perfect a security interest in goods (other than those having a certificate of title or other form of registration), negotiable documents, instruments, chattel paper, and investment property. (If filing is an alternative method, a security interest perfected by another method generally (with certain exceptions for goods) may take priority over a security interest perfected by filing.)
A financing statement must set forth specific information required in Business and Commerce Code sections 9.502 and 9.516 identifying the debtor, the secured party, and the collateral. See Tex. Bus. & Com. Code §§ 9.502(a), 9.516(b)(3)–(5). For timber to be cut, as-extracted collateral, or fixtures (in a fixture filing), additional information is required concerning the related real property. See Tex. Bus. & Com. Code §§ 9.502(b), (c), 9.516(b)(3)(D). Except as provided by Business and Commerce Code section 9.516(b), a filing office that accepts written records may not refuse to accept a written initial financing statement on an industry standard form, including a national standard form or a form approved by the International Association of Commercial Administrators, adopted by rule by the secretary of state. Tex. Bus. & Com. Code § 9.5211.
Generally, the financing statement must be filed in only one office in a jurisdiction. If Texas law governs perfection, the filing office is the office of the secretary of state for most types of collateral. If the collateral is as-extracted collateral, timber to be cut, or fixtures (in a fixture filing), the filing is instead made in the real estate recording office for a mortgage on the related real property. Tex. Bus. & Com. Code § 9.501(a).
Filings generally expire after five years and must be continued within six months before the end of the five-year period by the filing of a continuation statement. Tex. Bus. & Com. Code § 9.515. Special transitional rules for continuing the effectiveness of filings made before July 1, 2001, are found at Acts 1999, 76th Leg., R.S., ch. 414, §§ 3.01–.08 (S.B. 1058), eff. July 1, 2001.
Federal and state statutes may provide a means of perfecting a security interest in vessels, aircraft, intellectual property, and titled goods; perfection by these means constitutes perfection by filing. See Tex. Bus. & Com. Code § 9.311(b).
Possession: A secured party may perfect a security interest by having possession, either by itself or through a third party, of certain collateral. Tex. Bus. & Com. Code § 9.313.
Possession is required to perfect a security interest in money. Tex. Bus. & Com. Code § 9.312(b)(3). A security interest in an instrument, in goods (except those subject to a certificate of title or other registration), in a tangible negotiable document, or in tangible chattel paper may be perfected by filing or by possession. Tex. Bus. & Com. Code §§ 9.312, 9.313(a). A secured party may perfect a security interest in a certificated security by taking delivery of the security under Business and Commerce Code section 8.301. Tex. Bus. & Com. Code § 9.313(a).
Control: A secured party may perfect a security interest in a deposit account or letter-of-credit right as original collateral only by obtaining control of the deposit account or letter-of-credit right. Tex. Bus. & Com. Code §§ 9.312(b), 9.314(a). A security interest in investment property or electronic chattel paper may be perfected by filing or by control. Tex. Bus. & Com. Code §§ 9.312(a), 9.314(a). A security interest in an electronic document may be perfected by control. Tex. Bus. & Com. Code § 9.314(a). Specific rules determine when a secured party has control of an electronic document (Business and Commerce Code section 7.106), a deposit account (Business and Commerce Code section 9.104), electronic chattel paper (Business and Commerce Code section 9.105), investment property (Business and Commerce Code section 9.106), and a letter-of-credit right (Business and Commerce Code section 9.107).
§ 24.32Transfer of TUTMA Accounts
Section 141.010 of the Texas Property Code provides for the transfer of custodial property. See Tex. Prop. Code § 141.010. Custodial property that is held in the form of a certificate may be transferred by delivering the certificate (with any necessary endorsement) to the transferee together with an instrument similar to form 24-32 in this manual. Custodial property that is not evidenced by a certificate may be transferred by delivering any document necessary for transfer, with any necessary endorsement, to the transferee together with an instrument similar to form 24-32. The transferor should place the custodian in control of the custodial property as soon as practicable.
§ 24.33Transfer of U.S. Savings Bonds
The redemption value of U.S. savings bonds is available on the Internet at www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm.
The bonds can be transferred from one spouse to the other on divorce or to one spouse if the bonds are in the names of both spouses, but only one will be the owner after the divorce. If the divorce decree awards the bonds, a certified copy of the decree and any property settlement agreement can be sent to Treasury Retail Securities Site, P.O. Box 299, Pittsburg, PA 15230-0299. It would be wise to call the agency at 1-800-245-2804 to get the latest detailed instructions. The transfer may also be made by completing and sending Form PD F 4000, which is available at www.treasurydirect.gov/forms.htm. Simply follow the instructions on the form.
§ 24.34Estates Code Provisions Affecting Former Spouses
If, after the making of a will, the testator’s marriage is dissolved, unless the will expressly provides otherwise, all provisions in the will, including fiduciary appointments, are read as if the former spouse had failed to survive the testator. Unless a court order or contract relating to the division of the marital estate, whenever executed, provides otherwise, all provisions in the will disposing of property to an irrevocable trust in which the former spouse is a beneficiary or is nominated as a trustee or other fiduciary or that confers a power of appointment on the former spouse are read to instead dispose of the property to a trust the provisions of which are identical to the irrevocable trust, except that (1) any provision in the irrevocable trust conferring a beneficial interest or power of appointment on the former spouse shall be treated as if the former spouse had disclaimed the interest granted in the provision and (2) any provision in the irrevocable trust nominating the former spouse as a trustee or other fiduciary shall be treated as if the former spouse had died immediately before the marriage dissolution. Tex. Est. Code § 123.001. References to the former spouse include relatives of the former spouse who are not relatives of the testator.
The dissolution of marriage revokes the provision in a revocable trust instrument that was executed by a divorced person as settlor before the dissolution and disposes of property to the former spouse or confers a power of appointment or nominates the former spouse as a personal representative, trustee, conservator, agent, or guardian or in any other fiduciary or representative capacity. These provisions do not apply if a court order, the express terms of a trust instrument executed before the dissolution, or the express provision of a contract relating to the division of the marital estate, whenever executed, provides otherwise. Tex. Est. Code § 123.052. References to the former spouse include relatives of the former spouse who are not relatives of the settlor.
On the death of a divorced person who is a settlor in a trust created under a trust instrument executed by that person and his former spouse during their marriage that revocably disposes of property to the former spouse or confers a power of appointment or nominates the former spouse as a personal representative, trustee, conservator, agent, or guardian or in any other fiduciary or representative capacity, the trustee must divide the trust into two trusts, each of which is composed of the property attributable to the contributions of one of the settlors. These provisions do not apply if a court order, the express terms of a trust instrument executed before the dissolution, or the express provision of a contract relating to the division of the marital estate, whenever executed, provides otherwise. Tex. Est. Code § 123.056. References to a former spouse include relatives of the former spouse who are not relatives of the settlor.
If a decedent established a P.O.D. account or other multiple-party account and the decedent’s marriage is later dissolved, any payable on request after death designation provision or provision of a survivorship agreement with respect to the account in favor of the decedent’s former spouse is not effective unless (1) the divorce decree designates the former spouse as the P.O.D. payee or beneficiary or reaffirms the survivorship agreement in favor of the former spouse; (2) after the dissolution the decedent redesignated the former spouse as the P.O.D. payee or beneficiary or reaffirmed the survivorship agreement in writing; or (3) the former spouse is designated to receive, or under the survivorship agreement would receive, the proceeds in trust for a child or dependent of the decedent or the former spouse. If the designation is not effective, notice of the dissolution must be given to the financial institution. If the provision of a survivorship agreement is not effective under these provisions, the former spouse or relative is treated as having predeceased the decedent. Tex. Est. Code § 123.151. References to the former spouse include relatives of the former spouse who are not relatives of the decedent.
An agent’s authority under a power of attorney terminates when the agent’s marriage to the principal is dissolved, unless the power of attorney provides otherwise. Tex. Est. Code § 751.132.
§ 24.35Transfer on Death Deeds
An individual may transfer the individual’s interest in real property to one or more beneficiaries, effective at the transferor’s death, by a document called a “transfer on death deed.” Tex. Est. Code § 114.051. Revocation of a transfer on death deed may be accomplished by a subsequent transfer of the property or an instrument that expressly revokes the transfer on death deed. To be effective, the revoking instrument must be filed in the deed records before the transferor’s death. Tex. Est. Code § 114.057. If a marriage between the transferor and a designated beneficiary is dissolved after a transfer on death deed is recorded, a final judgment of the court dissolving the marriage operates to revoke the transfer on death deed as to that designated beneficiary if notice of the judgment is recorded before the transferor’s death in the deed records in the county clerk's office of the county where the deed is recorded. Tex. Est. Code § 114.057(c).
[Sections 24.36 through 24.40 are reserved for expansion.]
IV. Virtual Assets and Intellectual Property
§ 24.41Transfer of Domain Names
A domain name is transferred by first contacting the Web host online. Self-explanatory forms are available on the Web host’s website. Completion of the form requires the action of both parties. There is a small fee.
A patent may be transferred by completing an assignment of any document of conveyance. For example, see form 24-16, Assignment of Interest, in this chapter. The assignment must be attached to Patent Office–prescribed form PTO-1595 and mailed to Mail Stop Assignment Recordation Services, Director of the USPTO, P.O. Box 1450, Alexandria, VA 22313–1450. There is a small fee. A patent may also be transferred on the Internet. A transfer cover sheet may be created and submitted by completing the online Web forms and attaching the supporting legal documentation as a TIFF image or a PDF file for submission via the Internet. The web address is https://epas.uspto.gov.
A trademark may be transferred by completing an assignment of any document of conveyance. For example, see form 24-16, Assignment of Interest, in this chapter. The assignment must be attached to Patent Office–prescribed form PTO-1594 and mailed to Mail Stop Assignment Recordation Services, Director of the USPTO, P.O. Box 1450, Alexandria, VA 22313–1450. There is a small fee. A trademark may also be transferred on the Internet. A transfer cover sheet may be created and submitted by completing the on-line Web forms and attaching the supporting legal documentation as a TIFF image or a PDF file for submission via the Internet. The web address is https://epas.uspto.gov.
[Sections 24.44 through 24.50 are reserved for expansion.]
The following websites contain information relating to the topic of this chapter:
Animals (§ 24.27)
Cats
https://cfa.org
Cattle
www.angus.org (Angus)
https://beefmasters.org (Beefmaster)
https://brahman.org (Brahman)
www.tlbaa.org (Longhorns)
Dogs
www.akc.org
Horses
www.aqha.com (American Quarter Horses)
www.appaloosa.com (Appaloosas)
www.arabianhorses.org (Arabians)
www.palominohba.com (Palominos)
www.jockeyclub.com (Thoroughbreds)
Application to transfer Texas title to a boat (§ 24.22)
http://tpwd.texas.gov/fishboat/boat/forms/
Manufactured housing (§ 24.25)
www.tdhca.state.tx.us/mh/index.htm
Redemption value of savings bonds (§ 24.33)
www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm
Savings bond transfer forms (§ 24.33)
www.treasurydirect.gov/forms.htm
Transfer of patent online (§ 24.42)
https://epas.uspto.gov
Transfer of trademark online (§ 24.43)
https://etas.uspto.gov