When you buy a home, you receive the deed. And you hold title. The deed and title are interrelated yet distinct concepts.
Title refers to ownership, including the legal right to possess and use a parcel, the right to exclude others from using it, and the right to transfer your interest to others.
If you do transfer your property to another person, the deed is the vehicle that moves your legal interest in the property to the other party.
The deed, then, is:
- An integral element in a property conveyance.
- An official document that says an owner holds title to the real estate.
Consider the deed as a thing, and the title as a concept: the legal concept that you own the property.
Getting Deeper Into the Deeds
Your deed is a legal, written proof of ownership, signed by the named buyer and seller. It states the address and other identifying features of your property. It may incorporate by reference a separate contract of sale that sets out further agreed-upon terms.
The deed includes term of conveyance—the key legal language that transfers the property.
The deed takes effect when delivered from the seller and accepted by the buyer. In the middle of the two parties is the escrow company, whose agent receives the deed, and prepares to convey it to the buyer when the seller has received payment.
The sale cannot proceed if a title search turns up certain issues. Problems might be liens for unpaid property taxes, construction work, or homeowners’ association dues. The search might also show covenants, easements, and potential conflicting rights to use the property. If the title is clear, the sale can proceed.
After closing, the title or escrow corporation has the deed recorded in the county. Recording a deed is not necessary to transfer ownership, but it’s vital to give the property transfer its officially understood meaning. You may receive a property, but you’ll need a recorded a legal deed to transfer it. With the deed recorded, the certificate of title changes, reflecting changed ownership.
What Kind of Deed Do You Have?
There are several well-known types of real estate deeds for transferring title from a seller (grantor) to a buyer (grantee):
- The general warranty deed: This is standard. It provides the fullest protection. Its recipient receives clear title and full rights to transfer the property. It’s the seller’s guarantee against unexpected title defects dating back any time throughout life of the property, including all past ownerships.
- The special warranty deed: This is like a general warranty deed, but usually only covers any title defects that could have taken hold during the grantor’s time of ownership.
- The grant deed: This affirms that the grantor has clear title to sell, and that there are no known, undisclosed title defects. It lacks a key assurance of the general warranty deed: the grantor’s agreement to defend the title against anyone throughout the chain of title.
- The quitclaim deed: Often used among family members and divorcing spouses, this vehicle for transferring the title relinquishes any ownership rights the grantor might have held, and no more.
There are others, but these are commonly used deeds in real estate transactions.
What Kind of Title Do You Have?
Title can be held by a sole owner. When there are multiple owners, each title holder keeps a legally valid copy of the title. Co-owners may vest as:
- Joint tenants with rights of survivorship: Co-owners have equal shares, and when one of them dies, the interest passes to the surviving co-owner—often a spouse. If there are multiple surviving co-owners, they’ll acquire equal interests in the property.
- Tenants in common: These individuals (and possibly businesses) hold a specific percentage of ownership on the title. Percentages can be unequal, and they can be bequeathed in a will. Spouses can hold individual interests this way, and bequeath their interests to third parties.
- Tenants by entirety: In states that allow it, couples can use this form of title vesting so that each enjoys full ownership of the property. Depending on state law, creditors may not be able to place a lien on the property without the consent of the co-owner who is not the debtor. Each co-owner needs the other co-owner’s consent to sell their interest.
- Community property: In community property states, a couple owns real estate in equal shares and may transfer their interest or leave it in a will. Otherwise, the surviving partner receives it. Alternatively, community property can come with survivorship rights, if allowed by state law, and skip probate.
A title may also be in a corporate name, or held in a trust. Families vest title in trusts to offset property tax liability, or have the property managed for specific goals. An administrator holds a copy of the title on behalf of the corporation or trust.
Why Do You Have a Certificate of Title?
When you acquire a piece of real estate, you receive not only the deed, but also a certificate of title in your name. This document attests to the title company’s opinion that your title is clear, based on available public records. This public document supports your property interests, as a bona fide purchaser, against future claims for unresolved debts.
What if there are future claims? When you buy property, you’ll have to buy title insurance to protect your lender from potential surprises—an unrecorded mortgage, a mistake in the recorded information, an heir who turns up out of the blue, or fraudulent activity. A separate owner’s policy can protect you, the buyer.
The Difference Between Deed and Title: Boiling It Down
Deeds and titles are key instruments in real property conveyances. Title represents ownership rights (“interest”) in a property. An owner may have a full or partial interest. A property’s title moves from one owner to the next by a legally valid deed. Deeds provide varied assurances and protections to the buyer or grantee, depending on the kind of deed involved in the transaction.