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Buying a home means dealing with deeds and titles, but what’s the difference between a title and a deed? Many use the term interchangeably, but this is a mistake. Between house deed vs. title, there is a difference all buyers and sellers need to be aware of.
In 2021, 6.9 million homes were sold successfully in the U.S. If you’re planning to buy real estate in 2023, you need to know the difference between a deed and a title and how they figure into the purchasing process.
We’ve created a guide outlining the difference between a house deed vs. title to simplify these two cogs in your buying/selling journey.
What’s the Difference Between a Title and Deed?
The house deed is the physical document required to pass the ownership rights of a piece of real estate from a seller to a buyer. Most of the time, the deed will be recorded at the assessor’s office in your county or a courthouse.
On the other hand, a property title is a right to legal ownership and use of a property. Your title also provides you with the right to sell that property. The title is used to prove the ownership without encumbrances for a property before selling it.
The reason why people don’t see a difference between a house deed vs. title is that these documents both relate to the issue of who owns a piece of real estate.
What is a Title?
Your title is your proof of legal ownership of a home. Holding a title gives you the right to sleep, live, and enjoy your home. The title itself is not a single document but a series of rights that you and other entities can claim, including your mortgage lender.
So, what are these five rights, known as the bundle of rights?
· Right of Possession – Your legal right to own the property, the land, and everything on it.
· Right of Control – You’re free to use the property in any way you see fit, as long as you’re in compliance with local laws. The only real exception is if a homeowners’ association controls your neighborhood.
· Right of Exclusion – This right allows you to legally banish anyone and everyone from your property.
· Right of Enjoyment – Your title allows you to enjoy your property in any way you like, as long as you’re not breaking the law.
· Right of Disposition – You bought the property, and the right of disposition gives you the right to complete a house title transfer to somebody else.
These rights apply to all American housing deeds. However, some exceptions exist to some of these rights, such as if you have any liens, your right of disposition still stands, but those liens must be removed using the proceeds of the sale.
What Does a House Title Look Like?
Housing titles aren’t physical documents by nature, although you can ask for a document enshrining your rights.
Instead, a title is a legal concept that enables you to do as you please with your property within the bounds of the law.
Abstract of Title
Your title might be a concept, but everything can be documented in the form of an abstract of title. Your abstract of title will detail the past chain of ownership and legal history of your home. The abstract is a thick stack of paperwork you might already have in your home.
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Possessing your abstract of title makes it easy to go through a property’s history and get a clean title if you’re looking to sell.
During the closing process, your real estate lawyer or a title company will conduct a title search. It’s a pivotal step in the due diligence period before a sale can be closed.
The title search is designed to ensure the seller of the home has the right to sell and that there are no encumbrances on the home, such as liens or bankruptcies. Other examples of problems that can arise after a title search include:
· Improper title transfers
· Unpaid taxes
· Boundary encroachments
Before the seller can transfer ownership of the property, any issues with the title will need to be resolved. Depending on the complex issues raised, title problems could derail the sale entirely.
Title searches aren’t 100% foolproof. A knock at the door with someone else claiming to own the property or a nightmare discovery that the original seller obtained the property through wrongful foreclosure can happen. They’re rare, but they do happen.
It’s why buyers are advised to invest in title insurance. Experienced title professionals can be fooled by forgeries, undisclosed heirs, and filing errors. Title insurance is a one-time premium paid at closing to protect the buyer if title issues are discovered later.
Title insurance is a must-have for protecting your investment and defending the ownership of your property.
Two types of title insurance exist:
· Lender’s Title Insurance – Mortgage lenders will take out this type of title insurance to protect against financial loss caused by title problems. The buyer covers the cost of the lender’s title insurance.
· Owner’s Title Insurance – Owner’s title insurance offers the same coverage but protects the buyer. Depending on the transaction, the seller or buyer may pay for this policy. There’s no legal requirement to take it, but it’s strongly recommended.
Hidden defects can cause serious legal wrangles in your life. Paying the price of title insurance just makes sense, so you’re protected if something goes wrong.
What is a Deed to a House?
Your house deed is the legal document that transfers the title from the seller to the buyer. It’s the physical document stating you own the property. Both parties will sign the deed when it’s issued at the end of the closing process.
What Does a House Deed Look Like?
The house deed outlines the fact the title has been transferred from the seller to the buyer. The seller’s signature will be notarized to confirm they’re a legitimate person or entity with the legal right to transfer the real estate title as part of a legitimate sale.
The deed transfer completes the closing process and finalizes the fact the buyer is now the legal owner of that real estate.
How to Get a Copy of a House Deed
Obtaining a copy of a house deed may be necessary if you’re replacing a lost house deed. Note that the original deed usually won’t be kept at home. Instead, the declaration of your ownership will be held at your local county courthouse.
The deed you have at home will be a certified copy. Every state has its process for obtaining a copy of the deed, but you can kickstart the process by contacting the County Clerk and Recorder.
The grant deed demonstrates that your title is clear and you can sell it. It also shows you’re unaware of any impediment that could prevent the title transfer from happening.
It includes no warranty to defend the title against anyone else who may have claims against the owner of the title after the sale has taken place.
Special Warranty Deed
Special warranty deeds work like general warranty deeds in that they protect the buyer against future title issues. General warranty deeds promise a clear title for the length of time the property has existed.
The difference with a special warranty deed is it only promises a clear title for the length of time the seller has owned the home. Within commercial real estate, it’s known as a covenant deed.
A quitclaim deed offers minimal protection for the buyer. These deeds are most often used when the seller is gifting the property to somebody else, such as a parent signing over the title to a child.
Quitclaim deeds offer no guarantees that the seller has the right to transfer rights and ownership to the buyer. Unless you’re dealing with a family member or someone you trust, these deed types should be avoided because if anything goes wrong, there’s no recourse to act against the seller if problems are discovered later.
Which is More Important, Title or Deed?
House deed vs. title, which is more valuable?
Neither document is more important than the other. Titles and deeds are required to complete a legitimate, secure real estate transaction.
Holding one without the other is like buying a new car without having the keys. Before selling, make sure you have a copy of the abstract of the title and a certified copy of the deed, or your transaction won’t go anywhere.
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Completing any sale means engaging with the due diligence process. Experienced realtors are invaluable in following each closing step while leaving no stone unturned. In addition, the hand of an expert can speed up the closing process while offering security for both sides.
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