Deed Vs. Title: Know The Difference

Home buyers and sellers unfortunately can become overwhelmed by everything that goes into the buying or selling process, and the extensive use of real estate jargon along the way doesn’t make matters any less intimidating.

Like much of the terminology associated with the real estate industry, “title” and “deed” are terms that can cause confusion among those looking to buy or sell a home. Understanding the features that distinguish a title from a deed can help you feel more confident about the home buying process.

Title Vs. Deed, Explained

A title and deed are similar in that they both involve property ownership, but they differ in their appearance, overall intent and how they come into play during the closing process.

A title is a concept used to discuss ownership of a home, whereas a deed is a physical document proving the ownership – or, the title. Since the deed is tangible, it transfers the title from the seller (commonly referred to as the grantor) to the buyer (otherwise known as the grantee). The grantee will receive the title to the property and the associated deed at the closing phase of the home buying journey.

House Deed, Defined

We’ve already covered the major difference between a house title versus a deed, but it’s worth examining what each of these terms means on its own. When you purchase a home, you’ll receive the property deed – a legal document that provides a description of the property and declares your ownership, or title, over it.

Both the grantor and grantee are responsible for signing the document toward the end of the closing process.

Types Of Deeds

There are several types of deeds, each of which serves a different purpose. These deeds vary in levels of protection for the home buyer. Let’s take a look at a few of the popular types of deeds so you can decide which might be best for your situation.

• General warranty deed: Known to provide the most substantial protection to the home buyer, a general warranty deed guarantees that the seller isn’t hiding anything and is unaware of any property issues that might arise in the future. The deed also ensures the absence of any outstanding mortgages, liens or other claims against the property.
• Special warranty deed: Used more commonly with commercial real estate sales, the special warranty deed is similar to the general warranty deed but only applies to a specific time frame. This deed doesn’t protect against any claims that might have been filed before the current seller obtained the title.
• Quitclaim deed: A quitclaim deed is most commonly used in situations where property is transferred from one owner to another – such as parents to adult children, or spouse to spouse – without the exchange of money.
• Bargain and sale deed: A less popular type of deed, the bargain and sale deed is most commonly used in the states of New York, Washington, Wyoming, Colorado and Vermont during situations involving foreclosure, tax sales or transferring property between family members.
• Deed in lieu of foreclosure: When borrowers can’t keep up with their mortgage payments but want to avoid the negative impacts of foreclosure, they might agree to transfer the property to the lender through a deed in lieu of foreclosure.

House Title, Defined

Unlike a deed, a house title isn’t a tangible document you can hold in your hands. Instead, it’s a legal term that refers to your ownership of a home and the responsibilities that come with that ownership.

If you hold the title to a home, you have ownership along with all the legal rights to the property, including the right to sell. One or multiple people, like in the instance of a married couple, can hold a title. Corporations, partnerships and organizations can also possess a title.

House Title Terms To Know

Additional real estate terms are closely related to a title, and home buyers and sellers should be aware of them.

• Title insurance: Title insurance comes in two forms: lender’s title insurance and owner’s title insurance. The former protects the lender against potential losses, and the latter protects home buyers/soon-to-be-owners from unknown property issues. Lender’s title insurance is mandatory, and owner’s title insurance is optional.
• Title search: Typically conducted by a title company or real estate attorney, a title search involves the search of public records, including any former liens, deeds, mortgages, etc., that will impact the title of a property.
• Abstract of title: An abstract of title provides a home buyer with the entire legal history of a property, including any litigations, tax sales, deeds, title transfers, mortgages and encumbrances.

House Deed Vs. Title: Similarities And Differences

As previously noted, a title and deed are similar in that they both reference property ownership; however, there are clear differences in the way these items look, their overall intent and the way they’re handled during the closing process.

Physical Appearance

The biggest difference between a title and deed is their form, or appearance. A title is a concept people use to discuss ownership of a home, but a deed is an actual physical document that proves ownership (or title). You can physically hold a deed in your hand, but you can only discuss the title.

Overall Intent

If someone has a house title, they’re considered the owner of the property and given what’s referred to as a bundle of rights, which include:

• Right of possession: This ensures that the title holder can possess, or own, the property.
• Right of control: This allows the title holder to use the property however they want, as long as they aren’t breaking the law.
• Right of exclusion: This ensures that the title holder can limit who’s allowed to enter the property.
• Right of disposition: This allows the title holder to sell, rent or transfer ownership of the property.
• Right of enjoyment: This ensures that the title holder can enjoy the property.

A deed, on the other hand, is the physical documentation that provides proof of any title transfers that occur.

How They’re Handled

The differences between a title and deed become clearer during the home closing process when they’re both used.

After a title search is completed and it’s been verified that the current owner has the right to transfer the property, a settlement agent will prepare all necessary closing documents, including the deed, and schedule the closing. Both the seller and buyer will sign the deed, transferring the title and ownership of the property to the buyer.

Is A Deed Better Than A Title?

When you buy a home, you need both the deed and the title; one isn’t better than the other. The title is the concept of legal ownership while the deed is the document that proves ownership. Moreover, you can’t have a valid house deed if you don’t hold title.

The Bottom Line

A deed and title similarly refer to the ownership of a property, but there are key differences to be aware of as you venture into the home buying (or selling) process. Remember that while a title refers to your ownership of a property, a deed is the physical document used to prove and transfer that ownership.

Once you feel confident you understand the differences between a title and deed and you’ve decided which type of deed best suits your situation, take action and start your mortgage application online with the Home Loan Experts at Rocket Mortgage^®.