YH5BAEAAAAALAAAAAABAAEAAAIBRAA7, Checklands

Deed vs Title: Five Things You Should Know in 2021

Unlike a deed, a property title isn’t a physical document.

 

When you think of buying and selling property, you’re probably familiar with the terms “title” and “deed.”

Do you use them interchangeably?

If you do, you wouldn’t be the only one.

Although these terms are not synonymous, they are closely linked, and you should be highly familiar with how they’ll impact the buying process.

In this blog, we’ll run through the things you should know about the differences between a title and a deed.

Let’s get started.

1. A TITLE REFERS TO THE LEGAL OWNERSHIP OF A PROPERTY AND THE RIGHTS THAT COME WITH IT

A title proves legal ownership of a certain asset – land, home, car, etc.

However, unlike a deed, a property title isn’t a physical document.

It is a concept and is conveyed through property deeds.

If you have a valid deed, your title’s bundle of rights will include the following.

The right of control:

You’ll be able to use the property in a lawful manner you choose.

Keep in mind that the right of control isn’t absolute.

If there are covenants or restrictions in place that limit the allowable uses (such as a homeowner’s association CCRs or local zoning restrictions), you must abide by them even if you have clear title.

The right of disposition:

You’ll be able to permanently or temporarily transfer ownership of the property as long as there are no loans, liens, or other encumbrances.

The right of enjoyment:

You’ll be able to enjoy the property in any lawful manner (This is different than the right of control).

The long and short of this is that you must follow all laws while on your property.

The right of exclusion:

You have the right to choose who is allowed on the property.

This is usually an absolute right in that you are typically allowed to restrict access of your property to as you see fit.

However, if there is an easement on your property (such as an access or utility easement), the easement holder will have the right to access your property as allowed under the terms of the easement.

The right of possession:

You have the legal right to claim ownership of the property.

Title may also (but not always) convey mineral rights, water rights or other special kinds of rights.

2. A DEED IS A PHYSICAL DOCUMENT THAT CONVEYS THE TITLE

A deed is a document that proves ownership and is used to transfer property from the seller to the buyer.

For deeds to be considered legal, valid, and enforceable, they must contain the following components:

Identification of both grantor(s) and grantee(s)

Expression of the grantor’s desire to convey the property to the grantee

An accurate legal description of the property

The signature of the grantor(s)

So, in essence, the deed is the document that transfers title from one owner to the next.

Because the deed conveys rights, it’s important to resolve any outstanding issues before the property is legally transferred to you.

This way, you can enjoy your new property without fear of future complications.

3. THERE ISN’T JUST ONE KIND OF DEED

There isn’t a one-size-fits-all deed for every situation.

Instead, there are a few main types of deeds.

We’ll walk you through the ones you should know.

General Warranty Deed:

This type of deed is most often used in traditional home sales.

It provides the most protection for people buying your home.

It means that the seller is guaranteeing the property is free and clear of any issues.

It also says that your guarantee, as the seller, covers the life of the property (not just the period you owned it) and that you will defend the title against other people who may claim to have an ownership interest in it.

Special Warranty Deed:

This deed is similar to the General Warranty Deed above.

However, it only promises a clear title for the time that you, as the seller, have owned the property.

This type of deed is generally used in commercial real estate transactions.

You may also hear it called a Covenant Deed.

Grant Deed:

This deed shows that you have a clear title to sell and no knowledge of anything that may impact the title.

However, it does not include the warranty that will defend the title against other people who may end up having claims to it after the sale occurs.

Quitclaim Deed:

This deed offers the least amount of protection for a buyer of your home.

It’s typically used when a property owner gifts a property to someone else.

It’ll transfer rights and ownership to the buyer without any guarantee that the seller is actually able to do so.

Even if the seller is not able to legally sell the lot, the buyer wouldn’t be able to take any recourse against the seller.

Bargain and Sale Deed:

If your property is sold in a tax sale or a foreclosure, then it may be sold with a Bargain and Sale Deed.

This occurs when the seller doesn’t need to clear the title, and there are no protections for the buyer.

The buyer will be responsible for cleaning everything up after the fact (even if there are liens or other outstanding encumbrances).

4. YOU SHOULD ALSO UNDERSTAND THE ABSTRACT OF TITLE

The title is a concept rather than a document (that’s where the deed comes in).

That said, material facts related to a property’s title may be documented in the form of an abstract.

Think of it as a summary report of what is found in the public record.

It helps you track your home’s legal history and past chain of ownership.

The abstract of title often includes a summary of the original grant, subsequent changes in ownership, and any encumbrances on the property.

The person who prepares the abstract of title will also include a statement that the abstract is complete and accurate.

While it’s important to know that the abstract of title exists, most property owners will just keep it on hand.

It’s often a thick stack of paperwork that will be stored in a filing cabinet “just in case.”

5. WHEN PURCHASING A PROPERTY, IT IS YOUR RESPONSIBILITY (AS THE BUYER) TO FIND EVIDENCE OF TITLE

Finding evidence of title means that you can show the seller is able to convey with a marketable title.

This is usually done by means of a title search.

If you are buying a higher-value parcel of land, you’ll likely want to hire a real estate lawyer or a title company to do one for you.

A title search will trace the chain of title back through the public record.

The goal of this process is to find out if any defects exist.

After all, if the seller of the property cannot provide a marketable title, then your contract (as the buyer) should become void and your deposit should be returned without penalty depending on the details of your purchase agreement.

During this process, you, your real estate attorney or title company should look beyond recorded documents like deeds, utility easements, mineral leases, or mortgages.

You should also look into certain types of liens that may not be recorded (i.e. real estate taxes, inheritance taxes, etc.).

Be careful because a title search may also overlook other issues, such as encumbrances, on the seller’s ownership that were not recorded.

There isn’t a one-size-fits-all deed for every situation.

Instead, there are a few main types of deeds.

Land Educator at Checklands
Tim has been active in the rural land real estate industry for over five years. Tim has acquired over 25 parcels across the US and is an expert in land deals in Oklahoma. Tim is an educator on other platforms and Checklands is thrilled to have him as a contributor to our land education platform.
YH5BAEAAAAALAAAAAABAAEAAAIBRAA7, Checklands
Latest posts by Tim Flood (see all)