In real estate, many people use the term deed and title as if they are the same thing. But in reality, while they are related, they are not the same thing at all.
Definition differences: deed versus title
During the home buying process, a deed is a legal document that transfers the ownership rights to a property. A deed or property deed is an actual physical document signed by both the buyer and the seller.
However, a title is the legal way of saying you have ownership of the property. The title (or property title) is not a document, but a concept that says you have the rights to use that property.
So when you buy a property, you will receive the deed, a document that proves you are the property owner. That deed is an official document that says you have title to the real estate.
Types of deeds
- General Warranty Deed – Most commonly used in traditional home sales and provides the most protections. It means that you, the owner, have clear title and a right to sell the property, and no knowledge of any unforeseen issues that might come up with the title for the life of the property, not just since the time you owned it. It also says that no one else has rights to own the property.
- Special Warranty Deed – Similar to the General Warranty Deed with one exception – it only covers the time you’ve owned the home.
- Grant Deed – Like the two types of warranty deeds, shows that you have title and no knowledge of anything that might impact the title. But it doesn’t include the warranty that you’ll defend the title against other people who may have claims to it after the sale takes place.
- Quitclaim Deed – Offers the least amount of protection for a buyer and is normally used when a property owner gifts a house to someone else. It transfers rights and ownership to the buyer, but without any guarantee that the seller is actually able to do so.
- Bargain and Sale Deed – If there is a tax sale or foreclosure, the seller doesn’t need to clear title and there are no protections for the buyer. So if you’ve got liens on the property, they stay with it when you sell and the buyer is responsible for cleaning everything up after the fact.
How to get the deed and take title of a property
To get the deed and “take title,” or legally own the property, your lender will perform a title search of the public record. This ensures that the seller has the legal right to transfer ownership of the property to you as owner, and that there are no liens, personal property disputes, or claim possessions against it.
If everything is clear, then at closing, the seller will transfer the title to you, and you have legal ownership of the real estate property.
The title company will then ensure that the deed is recorded with the county assessor’s office or courthouse, depending on where you live. You’ll generally get a notification a few weeks after closing that your deed has been recorded.
If you don’t receive this notice, check with the professional who did your closing and ensure that the paperwork surrounding the deed and other legal documents have been filed. At that point, you have the deed and title to the real estate, and the property is yours.
Once the title is found to be legitimate, the title company will issue a title insurance policy, which protects lenders and new owners holding the title against claims or legal fees that may still pop up from disputes over the ownership of the house.
There are two main types of title insurance: owner’s title insurance, which protects the house owner from title issues, and lender’s title insurance, which protects the mortgage company. You, the home buyer, will pay for the lender’s title insurance when you close on the house, but it’s also a good idea to make sure you have an owner’s title insurance policy as well – in some parts of the country, sellers pay for these policies, in others, the buyer must purchase it.
Let’s say you buy a home and get both lender’s title insurance and owner’s title insurance, but then someone comes forward claiming they are the rightful owner of the home. If the title was wrong, and they are indeed the rightful owner of the home, your title insurance policy will hopefully pay you the value of the home and the lender the amount they lent you to buy the home.