A deed is typically considered a non-testamentary disposition. Property that has been deeded away, either directly or through a retained life estate, is not included in a grantor’s estate at death.
But are there ways to overturn a deed under Texas law? Yes. Like a will or an account/insurance designation, a deed can be set aside if a grantor lacked sufficient mental capacity to execute the deed. Or if the grantor was subjected to undue influence in executing the deed. The analysis will be similar to a will contest.
Mental capacity is relatively straightforward, even if the proof is often complex. Did the grantor have sufficiently mental capacity to know he or she was deeding the land or mineral interest to the grantee?
Another potential basis for overturning a deed is breach of fiduciary duty. If the grantee owed an existing fiduciary duty to the grantor, the deed is going to be subject to enhanced scrutiny. The burden of proof may even flip, with the burden on the grantee to prove the fairness of the deed. A fiduciary duty in this context most typically arises from the granting of a power of attorney. It may also arise through an informal confidential relationship, such as close family members or caregivers. A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure and must not obtain a personal benefit at the expense of the principal.
What are the remedies if a deed is found to be the result of undue influence, fraud, or breach of fiduciary duty? Or if the grantor lacked capacity? Typically, a court will invalidate the deed or impose a constructive trust on the property purportedly transferred by the deed.
A 1954 Texas Supreme Court decision, Curry v. Curry, involved an effort to overturn a deed based upon undue influence. The jury found that the deed was the product of undue influence. However, the trial judge overruled that verdict. The Texas Supreme Court upheld the trial judge. The Supreme Court held that the grantee did not unduly influence the grantor, just because he hired and paid the attorney who prepared the deed.
On the other hand, in Hill v. Parker, the Texarkana Court of Appeals upheld the trial court’s cancellation of a mineral deed due to undue influence. The court of appeals noted the trial court found:
that when appellant went to the home of appellee she was alone, that he told her he claimed an interest in the minerals in question, that her deceased husband was dishonest, that she knew he was dishonest, that he represented to her that he owned an interest in the property in question; that he returned to her home in the afternoon of the same day with an instrument prepared by appellant’s wife, and appellee, who was alone with appellant at the time, signed it . . . Mrs. Parker was in ill health, under care of a doctor; that the statements made to her by appellant and his claim to the property shocked her, that she was left in an almost hysterical state, that she had a fear that appellant would repeat such statements about her deceased husband in the future; that she was still under the influence of said statements when appellant returned with the deed that afternoon.
Undue influence claims are typically very fact specific and often are based on circumstantial evidence. These claims truly are decided on a “case by case” basis. The consistent theme is that opportunity and motive alone are not enough to prove undue influence to overturn a will or deed in Texas.
Will contests are fought in probate courts or in courts exercising probate jurisdiction over contested estates. Cases involving disputed deeds often end up in Texas district courts. Either way, it is important to investigate such claims thoroughly, whether you are contesting or defending a deed. The statute of limitations will typically be from two to four years of the deed’s filing, depending on the particular claim.