Fraudulent Deeds...Can they be Set-Aside by Courts?

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

Recently, I completed the successful defense of a client whose elderly parent had sued them to set-aside a years old deed to real estate in San Antonio on grounds of fraud.  

The fraud allegations in that case were unique, in that the parent was alleging fraud in the inducement, as opposed to fraud in securing the deed, or outright forgery. The parent alleged in the lawsuit that, even though the parent had knowingly and intentionally signed the deed in favor of the child, this conveyance was in consideration for a promise by the child (which was allegedly false at the time it was made) that such child would care for the parent for life.  

When the parent determined that the child wasn't doing a good enough job as a caretaker, suit was filed in an effort to have the Court determine that the deed was void, and should be set-aside.  Although the case was resolved quickly, in our client's favor, our research revealed some important points of law that are worth re-producing here.

First, deeds procured by fraud are voidable only, not void, at the election of the grantor.  

Second, it is well-settled law in Texas that a properly executed, notarized and recorded deed  (if if such deed is alleged to be fraudulent) is valid and represents prima facie evidence of title until there has been a successful suit to set it aside. See Meiners v. Texas Osage Cooperative Royalty Pool, 309 S.W.2d 898 (Tex. Civ.App. — El Paso 1958, writ ref'd n. r. e.); Whalen v. Richardson, 353 S.W.2d 941 (Tex. Civ.App. — Amarillo 1962, n. w. h.). To the same effect is Deaton v. Rush, 113 Tex. 176, 252 S.W. 1025 (1923), wherein the court stated that: A deed obtained by fraud is not void but voidable only. As between the original parties [Defendant's] title is prima facie good, and it could only be avoided by a suit and a decree annulling and canceling the deed.

Third, it is a fundamental rule of law that only the person whose primary legal right has been breached may seek redress for an injury. As such, a suit to set aside a deed obtained by fraud can only be maintained by the defrauded party. Smith v. Carter, 45 S.W.2d 398 (Tex.Civ.App. — Texarkana 1932, writ dism'd); Meiners v. Texas Osage Cooperative Royalty Pool, supra. A party who was not defrauded by the conveyance has not suffered an invasion of a legal right and therefore does not have standing to bring suit based on that fraud.

Fourth, at least one Texas Court of Appeals has allowed to stand a Judgment issued by a Texas District Judge setting aside a deed based upon an alleged false promise by the grantee to care for the grantor "for the rest of his life." Williams v. Kaufman, 275 SW 3d 637 (Tex.App. --Beaumont) 2009

While it appears that setting aside a deed based upon fraud in the inducement may be tough, and somewhat uncommon, deeds secured by forgery and other fraudulent artifices are more common. An individual involved in a dispute over a fraudulent deed should consult with an experienced real estate attorney to explain the law and discuss possible outcomes.