House Title: The Difference Between Title and Deed
The world of real estate can be a confusing one. With all of the industry terms being thrown around, it’s sometimes difficult for the layman to understand what realtors and real estate investors are referring to. This guide will help you understand the difference between a title and a deed, two words that are common in the world of real estate.
People often use the terms “deed” and “title” interchangeably. This can make things all the more confusing. Read on to learn more about house titles, deeds, and the differences between the two.
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What Is a House Title?
A house title is a conceptual, legal way of signifying ownership of a property. A title gives the owner of a property the right to use and modify the property. When you’re buying or selling a home, a title is the conceptual apparatus that makes the transaction possible. Titles also apply to property such as automobiles, as well as corporations and legal entities.
Should you encounter a dispute over ownership rights, titles are useful in clearing that situation up. If you have a defective title or lack a title whatsoever, it is extremely difficult to establish that you own a piece of property. A missing title makes it difficult to sell land or exercise your rights to make changes on a property.
What Is a Deed?
Deeds are legally binding, written documents that prove ownership of a particular property and grant you the right to transfer that property’s title to another owner. In other words, deeds outline who owns the rights to a property.
Deeds ensure the seller has the legal right to transfer ownership of the property. A clean deed also demonstrates that there are no liens against the property. During the home sale closing process, the deed will be transferred to the buyer, granting them legal ownership of the property. The person transferring the deed is the grantor, while the person receiving it is the grantee.
There are a few different types of deeds, including:
- Quitclaim Deeds: This type of deed transfers interest in real property. Unlike other property deeds, quitclaim deeds entitle the grantee whatever property the grantor actually possesses at the time of the transfer. In other words, there are no guarantees with this sort of deed.
- General Warranty Deeds: This kind of deed guarantees that the grantor has the right to sell a piece of real estate. The guarantee is not limited to the amount of time the grantor has owned the property. Instead, general warranty deeds extend back to the origins of the land and residence. They are most commonly used in residential home sales.
- Special Warranty Deeds: This deed doesn’t guarantee against any defects in the title that existed before the grantor took possession of the property. Special warranty deeds are common in commercial property title transfers.
- Deed in Lieu of Foreclosure: This kind of deed allows homeowners who are delinquent on their mortgage payments or USAA mortgage payments to avoid foreclosure.
Deeds are required to transfer titles. To be valid, deeds must be recorded by a local authority, but failure to file a deed makes it imperfect. Imperfect deeds do not change the transfer of a title.
According to the Statute of Frauds, deeds must be written documents. The value of a deed can be less than the value of the title that you own.
Deed vs. Title
While similar, deeds and titles have significant differences physically and conceptually.
Physical Differences Between Title and Deed
Titles are a person’s name attached to their legal position regarding ownership of a property. They are not documents, but concepts. Deeds are the physical, legal documentation granting ownership of property. Unlike titles, they are a hard copy, hand-written legal document.
Conceptual Differences Between Title and Deed
Titles give a person the legal right to occupy and change the property in whatever way they wish. A deed is used to transfer the title from one owner to another. Regardless of whether or not a deed is filed, what’s stated on a title holds true. In other words, a deed isn’t necessarily required to transfer ownership of a property.
How to Change the Title on a House
If you are selling your home, you’ll need to change the title over to the bank or new owners. To change the title on a deed, it needs to be recorded on a new deed with your county recorder’s office. While the process may vary by state, it generally requires you to:
- Obtain a blank deed: In the transfer of property, titles aren’t altered, but deeds are. You can conduct a title search to show who has owned the property previously. The type of deed you obtain depends on the reason for changing the name on the title. Whatever you do, make sure you obtain a deed that’s valid in your state.
- Fill in new information: Accurate, legible information must be on the deed for it to be accepted. You’ll need to list the following on the new deed:
- Your name (grantor).
- Grantee’s name.
- Description of the property, including the address and tax number.
- Declaration of Documentary Transfer Tax Form, if applicable.
- Return and mailing addresses.
- Notary seal.
- Get the deed notarized: It’s important not to sign and notarize the deed until you’re ready to file. Find a notary in your area, or have it notarized at your county recorder’s office. To find the office nearest you, search your county’s website for “county assessor.”
- File the deed: Submit the deed to your county clerk’s office, providing proof of your identification and the signed and notarized deed. There will be a fee to file the deed, but it becomes valid once the filing is complete.
Whether you are a first-time homebuyer or investing in a second home, transferring ownership of a property can seem like an intimidating process. With this knowledge on deeds and titles, you’ll be able to do so quickly, easily, and legally.
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This post was updated January 2, 2020. It was originally published January 2, 2020.