What is the difference between a property title and deed? You’ve probably heard them used interchangeably. Even though they go hand-in-hand, only one is a physical piece of paper, while the other is a set of rights. Let’s make sure you understand the purpose of each before you buy a new home.
What is a Property Title?
So, what is a property title? Interestingly, a title isn’t a piece of paper. It’s the concept that you legally own a home. The title is a set of rights – referred to as a “bundle of rights,” which includes:
- The right of possession – The property is yours. You own it. Period.
- The right of control – As long as you stay within legal limits, use the property any way you choose.
- The right of exclusion – You decide who comes and goes on your property.
- The right of enjoyment – As long as it’s not illegal, use the property however you’d like.
- The right of disposition – Since you own it, you can sell it (transferring the title to someone else).
What is a Property Deed?
If the title is a concept, what is a property deed? As you probably guessed, it’s the legal document transferring the title’s bundle of rights. The deed includes the name of the buyers (grantees), sellers (grantors), and a property description. When buying property, you’ll leave with the signed deed in hand. Both you and the seller sign the deed. Without both signatures, it’s not official.
However, not all deeds are the same. Let’s take a look at a few different types.
General Warranty Deed
For most traditional home purchases, you’ll get a general warranty deed. This offers buyers the most protection because it ensures a clear title. In other words, the owners have the right to sell you the property because it’s theirs. A general warranty deed certifies that sellers aren’t aware of any potential problems with their deed (such as liens). Not only when they owned it, but for the life of the property. In short, you won’t have any post-sale worries from third parties insisting they own your new home. And even if someone does claim to own all or part of the property, the sellers defend the title.
Special Warranty Deed
Commercial properties often use special warranty deeds. Like general warranty deeds, they promise a clear title – but only during the time the seller owned the property.
A grant deed also guarantees the seller owns the property and can legally sell it. However, it doesn’t promise that the sellers will defend the title, should a third party claim ownership.
When gifted property, you may receive a quitclaim deed, which offers the least amount of protection. With it, you won’t know if the property has a clear title. And if it doesn’t, there’s no recourse for you against the giver.
Bargain and Sale Deed
Bargain and sale deeds are common when buying a foreclosed home. With these deeds, the seller doesn’t claim to have the right to sell the property. In other words, buyers have no protection. For example, if there are liens against the property, you’ll become responsible for them after the sale.
How to Get the Deed and Take the Title of a Property
So, where do you get the title for your house? During the property closing, a title company will perform a public record title search to make sure the seller has legal ownership of the property. They’ll look for any liens or claims against it. If the title comes back clear, you’ll be able to get the deed to your new property and “take title,” becoming the new owner.
Let’s talk about the importance of title insurance. With it, you can protect yourself against costly title problems, even after closing. While the title company should catch any issues upfront, title insurance is an extra layer of security. It will pay for any legal costs associated with filing errors, conflicting wills, or undocumented easements, to name a few examples. Plus, you can ask sellers to pay for it as part of closing.
Protect Yourself From Unknown Title Defects With Title Insurance
If you’re interested in exploring title insurance further, check out our FAQs about title searches and title insurance. Or, contact a professional at Trident Land Transfer Company. As part of the BHHS Fox & Roach family of companies, we’re here to provide everything a homebuyer needs.