What is a Correction Deed?
A correction deed, or correction instrument, is used to clarify ambiguities or cure errors in an existing instrument conveying real property without having to resort to judicial reformation. Texas law has allowed the limited use of correction deeds, although there was historically little guidance by the legislature or judiciary as to their proper scope and method of execution. Examples of the limited uses of correction deeds permitted by Texas courts included facial imperfections in title, such as curing an inaccurate acreage amount in a metes and bounds description or a defective description of a grantor’s capacity.
But what if the parties wish to include an entirely new tract of land? And who must execute a correction deed in order for it to effectively correct and relate back to the date of the original conveyance? The Texas Legislature cured this lack of guidance in response to the Texas Supreme Court’s decision in Myrad Props. v. LaSalle Bank Nat’l Ass’n, 300 S.W.3d 746 (Tex. 2009).
Myrad and Materiality
Myrad involved a non-judicial foreclosure sale of two separate properties financed by Myrad Properties, Inc. (“Myrad”) and secured by a deed of trust held by LaSalle Bank National Association (“LaSalle”). Upon Myrad’s default, LaSalle foreclosed on both properties under the deed of trust and posted the required foreclosure sale notice. LaSalle won the foreclosure auction, and the trustees issued a deed (the “Trustee Deed”) to LaSalle. However, the Trustee Deed defined the “Property” conveyed thereby as “the real property described in Exhibit A,” which described only one of the two properties secured by LaSalle’s deed of trust.
After LaSalle recorded a correction deed covering both properties, Myrad filed an action to quiet title and for a declaration that LaSalle owned only the property listed in the Trustee Deed. The trial court ruled that the foreclosure sale conveyed title to both properties and the correction deed vested title in both properties to LaSalle. The court of appeals affirmed.
The Texas Supreme Court (the “Court”) reversed the lower courts’ decisions and held that a correction deed could not be used to convey an additional property not described in the original deed as it was void as a matter of law. The Court explained that such use would go beyond the narrow scope of a correction deed and present unnecessary confusion and expense into the Texas real property records system. It should be noted, however, that although it held the Trustee Deed to be void, the Court ruled in favor of LaSalle and rendered judgment on its claim for rescission of the Trustee Deed in order to avoid any unjust enrichment in favor of Myrad.
The Texas Legislature to the Rescue: Correction Deed Statutes
In 2011, the Texas Legislature responded to the decision in Myrad by enacting correction deed statutes, which codify the use of correction deeds for both nonmaterial and material changes.
A. Tex. Prop. Code § 5.028: Nonmaterial Corrections
A person with personal knowledge of the facts relevant to the correction of a recorded original instrument of conveyance may prepare or execute a correction instrument to make a nonmaterial change that results from a clerical error. Such nonmaterial changes include the correction of (i) an incorrect element in a legal description, such as a distance, angle, direction, bearing or chord, plat information, a lot or block number, a unit, building designation, or section number, an appurtenant easement, a township name or number, a municipality, county, or state name, a range number or meridian, a certified survey map number, or a subdivision or condominium name; (ii) a party’s name; (ii) a party’s marital status; (iii) the execution date; (iv) recording data for an instrument referenced in the correction instrument; or (v) a fact relating to the acknowledgment or authentication.
A person who executes a correction instrument under this section shall disclose in the instrument the basis for the person’s personal knowledge of the facts relevant to the correction of the recorded original instrument of conveyance. If the correction instrument is not signed by each party to the recorded original instrument, the person who executes a correction instrument under this section shall send a copy of the correction instrument and notice by first class mail, e-mail, or other reasonable means to each party to the original instrument of conveyance and, if applicable, a party’s heirs, successors, or assigns. The person executing the correction instrument shall record (i) the instrument and (ii) evidence of notice to any non-signing parties, if applicable, in each county in which the original instrument of conveyance being corrected is recorded.
B. Tex. Prop. Code § 5.029: Material Corrections
Theparties to the original transaction or the parties’ heirs, successors, or assigns, as applicable may execute a correction instrument to make a material correction to the recorded original instrument. Material corrections include (i) adding or removing land to a conveyance that correctly conveys other land; (ii) adding a buyer’s disclaimer of an interest in the real property that is the subject of the original instrument of conveyance; (iii) adding a mortgagee’s consent or subordination to a recorded document executed by the mortgagee or an heir, successor, or assign of the mortgagee; and (iv) accurately identifying a lot or unit number or letter of property owned by the grantor that was inaccurately identified as another lot or unit number or letter of property owned by the grantor in the recorded original instrument of conveyance.
A correction instrument under this section must be (i) executed by each party to the recorded original instrument of conveyance the correction instrument is executed to correct or, if applicable, a party’s heirs, successors, or assigns; and (ii) recorded in each county in which the original instrument of conveyance that is being corrected is recorded.
The correction deed statutes enacted in response to Myrad go a long way towards clarifying the proper scope and method of execution of correction deeds. It is important to remember that although Section 5.028 only requires a correction deed making nonmaterial changes to be executed by a person who has personal knowledge of facts relevant to the correction, Section 5.029 requires correction deeds making material changes to be executed by all parties to the original transaction or the parties’ heirs, successors, or assigns, as applicable. Thus, Section 5.029 places a higher procedural standard for correction deeds making material changes. In the event either section is not strictly complied with, a party seeking to properly execute a correction instrument risks failing to correct the original instrument as to cure any applicable defects. See Yates Energy Corp. v. Broadway Nat’l Bank, 609 S.W.3d 140 (Tex. App.—San Antonio 2018). In order to remove all doubt as to statutory compliance, the most conservative approach is to ensure that all parties to the original transaction or their respective heirs, successors, or assigns, execute any correction instrument, whether making a material or nonmaterial change.Return To Full Blog Page
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