If you’re thinking about buying a house soon, you’ll want to know what “title” and “deed” mean. Both the deed and the title are transferred when a seller (known as the grantor) transfers ownership of a residence to a buyer (known as the grantee). A deed and a title, on the other hand, are not the same thing, and both come with a long list of tasks for the buyer/grantee and seller/grantor to do.
The Difference Between A Title And A Deed
The physical component is the most significant distinction between a deed and a title. A title relates to the concept of ownership rights, whereas a deed is an official written document declaring a person’s legal ownership of a property.
Here’s an easy way to remember the difference: you can hold a physical copy of a book in your hand, but you can’t hold the title of a book in your hand. A book title and a property title are similar in this way: neither are tangible objects, but rather concepts. A deed, on the other hand, can (and must) be physically in your possession once you buy a home.
Understanding titles and deeds, as well as their function, is an important element of becoming a homeowner, and it’s especially important at the start of the process.
What Is A House Deed?
A deed is a legal document that allows a seller/grantor to transfer property ownership to a buyer/grantee. A deed specifies the seller/grantor and the buyer/grantee, as well as a description of the property (including property boundaries). To make the paper official, all parties must sign it.
General Warranty Deed
The buyer/grantee is protected by a general warranty deed, which guarantees that the seller/grantor has full title and is the single property owner with the right to sell. It also guarantees that the seller/grantor is unaware of any potential property concerns. A mortgage business is usually in charge of preparing it.
As a home buyer, it’s critical to research your local regulations to determine what information should be provided to you during the purchase process. A history of violent crime on the property, neighborhood nuisances such as repeated foul odors, chronic property damage hazards such as floods, and any substantial structural repairs that have been undertaken are all common categories for obligatory disclosure. Sellers may also be required to declare if the home is located in a historic area, as this may limit the amount of remodeling that may be done.
Special Warranty Deed
A special warranty deed is identical to a general warranty deed, except that it only guarantees title during the seller’s ownership of the land. This sort of deed is more commonly utilized for business property transactions than for house purchases.
When a property is transferred from one legal entity to another without any money changing hands, quitclaim documents are commonly employed. The following are some examples of quitclaim transfers:
- Parents transferring property ownership to children
- One spouse transferring property ownership to the other
- Individuals transferring property ownership to trusts or LLCs
In the event of a name change, another somewhat typical purpose of quitclaim deeds is to modify the legal name printed on the deed.
Quitclaim deeds do not provide the same safeguards for the beneficiary as a traditional deed does.
What Is A Title?
A title is a legal right to property ownership, which includes the right to sell. Titles aren’t just for real estate; they’re also for boats, vehicles, and a variety of other valuable things. When you buy a property legally, the title is transferred to the buyer, therefore if you buy a house, the title will be yours as well as the deed.
The purpose of title insurance is to safeguard the buyer from unidentified property problems or encumbrances. Lenders will almost always demand title insurance, but purchasers can choose for it as well.
The majority of experts advise house purchasers to get this insurance or negotiate with the seller to have it purchased for them (this is not uncommon). In the event of a property ownership dispute, title insurance is essential. If a disagreement arises without insurance to safeguard the purchase, the buyer might lose their home and the money they have invested in their mortgage in the worst-case situation.
A title search is performed to identify any restrictions on property usage, such as easements, as well as any outstanding payments, such as liens. It also aids in determining if the seller has the legal authority to transfer ownership.
A title search may be done by anybody lawfully, although it’s usually done by a title firm or a real estate attorney. A title search can be done as part of the title insurance application procedure, although it isn’t required. It is possible to do a search that is just for the purpose of gathering information.
Abstract Of Title
An abstract of title is a document that details the property’s previous owners as well as any liens or other encumbrances.
The Bottom Line
It’s critical to comprehend all of the jargon used during the home-buying process. Keep in mind that a title is a legal right to ownership, but a deed is the tangible document that proves that right. To-do lists come with both titles and actions.
When it comes to deeds, it’s crucial to make sure you have your deed in your hands and to research your local regulations to ensure you’re revealing all property concerns. When it comes to titles, it’s crucial to decide whether you want title insurance, do a title check, and ensure you have the abstract of title in your possession.