Deed Vs. Title: A Guide To Understanding The Difference

Understanding a deed versus a title is an important part of the home buying process. A deed is a physical, legal document that transfers ownership between parties. A title, however, refers to the status of legal ownership and the rights to a property.

What Is A Deed?

A house deed is a legal document transferring ownership from the seller or grantor to the buyer or grantee. This is the most significant part of the home buying process, as it’s required by law to transfer the property. Both the buyer and seller sign the document, which becomes part of the public record when recorded with the county Recorder of Deeds.

Types Of Deeds

There are five types of deeds, depending on the situation. Here’s how they work.

General Warranty Deed

A general warranty deed offers buyers the most protection. The deed guarantees the seller owns the home without debts, liens or encumbrances. This means the seller has the right to sell the home, and should any legal recourse occur regarding the property’s ownership, the buyer can hold the seller responsible.

Special Warranty Deed

A special warranty deed also protects the buyer but is limited. Rather than guaranteeing the property’s entire history, the special warranty deed guarantees the property is lien-free during the time the seller owned the property. It doesn’t cover the time before the seller took possession of it.

Grant Deed

A grant deed transfers a property’s interest from the grantor to the grantee; however, it doesn’t provide any protection against any title defects. This includes any undisclosed liens.

Quitclaim Deed

A quitclaim deed provides no legal protection and is strictly a transfer of ownership, usually between family members. Because of the lack of legal protection, the quitclaim deed should only be used when both parties are familiar with each other, such as when transferring property to an ex-spouse or from parents to children.

Bargain And Sale Deed

The bargain and sale deed is similar to a quitclaim deed; however, it’s used in times of sale or property transfer between unfamiliar parties. Like the quitclaim deed, there is no legal protection against any defects.

What Is A Title?

The property title isn’t a legal document; instead, it’s the property owner’s legal right to the property. When a person holds title to a home, they have legal rights and responsibilities to the home.

If you hold title, you have the right to do the following:

• The right of possession: You have the right to own the property.
• The right of control: You have the right to use the property how you see fit, as long as you don’t violate any local zoning guidelines.
• The right of exclusion: You have the right to say who can and can’t enter the property.
• The right of disposition: You have the right to sell the property to another party.
• The right of enjoyment: You have the right to use and enjoy your property as you wish, as long as you don’t break any laws.

What Is An Abstract Of Title?

The abstract of title chronologically documents the title’s history. It starts at the property’s inception. The abstract helps real estate professionals ensure the chain of title is clear and legitimate.

What Is A Title Search?

When you apply for a mortgage, your lender will require a title search from the title company assigned to your mortgage. The title search is similar to the abstract; however, the search goes back approximately 10 years, and the abstract goes back to the property’s beginning.

What Is Title Insurance?

Title insurance is an insurance policy that protects the lender (lender’s policy) or owner (owner’s policy) against any title defects, such as a claim of ownership or financial claims during prior ownership.

Which Is More Important: Title Or Deed?

A title and deed are equally important to property owners because both are a legal part of the closing process. The title provides the rights to the property, whereas the deed is the physical, legal document signed by the seller and buyer.

What Is The Difference Between A Title And Deed?

The title refers to your inherent rights as the property owner. A deed is a physical document proving the transfer of real estate. A title is conceptual, a deed is physical.

The title and deed go together in a real estate transaction. When a seller signs over the property deed to the buyer, they also transfer the title (aka the rights) to the home. The largest difference is a title company can conduct a title search to ensure the seller has exclusive rights to transfer the property and that no outstanding liens exist.

The only physical document showing the transfer of ownership is the deed; however, both the title and deed transfer legal ownership.

The Physical Difference Between A Deed Vs. Title

As we stated, a deed is a physical, legal document that the seller and buyer sign at the closing. The title is a concept; there isn’t a document to sign.

The deed gets filed at the local courthouse to record the buyer as the new legal owner. A deed also requires notarization when all parties sign it.

When you take the title of a property, you take ownership of all prior transfers and transactions of the property. This is why a title search is so important to ensure there aren’t any costly or legal issues you could inherit.

The Purpose And Use Of A Deed Vs. Title

The deed – a physical, legal document – shows the transfer of ownership. It’s a record of the current and new owners, proving the title rights transfer. The deed and title go hand in hand, but the deed is the only physical document that shows proof of ownership.

The Process And Requirements For A Deed Vs. Title

The buyer’s lender will request a title search when a real estate transaction occurs. This is something the title company does to research the property’s chain of ownership. During the search, the title company reviews past deeds and other documents, such as divorce decrees, wills and liens.

The title examiner reviews the documents, determining who the current owner is and what liens exist on the property. Then, the title examiner creates a title abstract, determining if the current owner has the right to transfer the property to the buyer. If the title is clear, the lender can close the loan, and as a part of the process, the buyer and seller will sign the deed, officially transferring the property to the buyer.

How To Get A Deed And Take The Title Of A Property

Getting a deed and taking the title of a property is a large part of the real estate closing process. Here are the steps taken to make it happen.

1. Title Search

The lender will order a title search to ensure the current owner is the legal owner and has the right to transfer the property. The title search also determines if any other liens exist on the property. If the title search isn’t clear, the seller must clear up any existing liens before transferring the property.

2. Title Insurance

If the title search comes back clear, the lender will require buyers to purchase lender’s title insurance. Buyers can also purchase optional buyer’s title insurance. These policies protect the appropriate party (lender or buyer) from any disputes moving forward regarding ownership or liens on the property. If there's a lawsuit or other legal action, the insurance will cover the cost to resolve the issue.

3. Pay To Record The Deed

The deed gets recorded with the county, and the fee is usually part of your closing costs. It’s a minimal cost, typically less than $50, depending on where you live.

4. Sign The Deed

The final step is to sign the deed at the closing. The seller and buyer must sign it, and both signatures must be notarized. The deed then goes to the county for recording, and the buyer becomes the new buyer of record.

The Bottom Line

When comparing deed versus title, both are equally important. The deed is proof of your ownership or transfer of ownership of the property, and the title is the rights the new owner has in the property. Understanding these terms is important whether you’re buying or selling a home.

If you’re ready to take the next steps, connect with an agent today.