What is difference between a title and a deed in real estate? If you are in a real estate transaction, you’ve heard these commonly misunderstood terms.
There are many moving pieces in real estate, so you might not have given pause to the meaning of these terms.
However, I guarantee that if a problem arises, you’ll want to know what title is right away.
Below, we break down the difference between a title and a deed, how common these issues are, and how to transfer title.
What Is The Difference Between A Title And A Deed
What Is A Title
In general, title is a legal term referring to ownership of something. Having title means you have ownership of the property. It also means you have rights to use the property. In real estate, that “something” involves a property.
Full Versus Partial Ownership
Note that you may have either full or partial rights to the property. Either way, if you have the title, you can access the property and usually modify it as you see fit.
Having title also means you can transfer your portion of ownership and rights (whether full or partial) to someone else, but are only able to transfer as much ownership and rights as you possess.
For example, if you own 50% a property with a sibling, you would be unable to sell the property fully without the consent from your sibling to sell their part of the ownership as well.
What Is A Deed
A deed is the actual legal document that transfers the title (ownership) from one person to another.
So then, “title” is the term for the concept of ownership, and the “deed” is the actual piece of paper to represent the concept.
The deed represents ownership and the owner’s rights to claim a property. Some people call the deed the vehicle by which the interest in property transfers from a grantor (seller) to a grantee (buyer).
A legitimate deed includes the names of the grantor, grantee, and a full description of the property.
Every state has its own requirements, but most states must include the following essential elements for a legitimate property deed:
- The grantor (seller) must have the legal right to transfer their property interest.
- The grantee (buyer) must be capable of receiving ownership of the property.
- The deed must include a full description of the property.
- The deed must be in writing.
- It needs to include the necessary legal language for transferring the property.
- The deed must be signed by the grantor or grantors if more than one owner exists.
How Common Are Title Problems in Houston?
Because 60% of Americans do not have a will, title problems are very common.
Title issues are most common when the original property owner passed away without leaving a valid will.
People often don’t realize how complicated it can be to settle ownership interests when someone dies without a will. They think it automatically goes to the spouse or children, and that’s not always the case. We often find widows who are living in the same home they occupied with their husband. However, upon his death she only retained the right to continue living there, not title to the home.
Unfortunately, too many people don’t realize they even have title issues until they go to sell the house.
The Importance Of Receiving Clear Title
While many people lack n understanding of title, it remains one of the most crucial components of a real estate transaction.
Real estate transactions involve many moving parts, but if the title is unable to be cleared, the process comes to a screeching halt. Buyers don’t want to buy a property they won’t own. If the title cannot be made free and clear, that’s exactly what happens to a buyer.
While a title search can resolve many potential obstructions, below, we briefly cover the process to obtain a title transfer.
How To Obtain A Title Transfer
If someone failed in getting a title transfer when they bought a house, they may do so years later when they themselves want to sell or need to apply for insurance or disaster relief.
Here is what is needed:
If you don’t have title to a house and find yourself in need of it, you can (and will need to) get the title cleared to sell any house. It’s always wise to get the title cleared and buy an insurance policy, as soon as possible. One way or the other, the problems don’t go away so someone will eventually have to fix it.
The first item you need in this process involves the deed instrument. Make sure you have a General or Special Warranty Deed since Quit Claim Deeds in Texas rarely hold up.
If you didn’t close at a title company you also need to know if the correct deed was drawn up and recorded. This can be pulled from the county clerks’ website.
The title company can then help you start clearing title by looking at the people who had rightful title to the home before you bought it or moved in it. They would have to settle that person’s interest and pay off any liens against that person before title could transfer to you, the new owner.
You may even have to go track down heirs to original lien-holders or find the financial institution that bought the mortgage that you think you paid off, but don’t have a release to show the lien removed.
To put it simply in review, “title” is the term for the concept of ownership, and the “deed” is the actual piece of paper to represent the concept.
Deed requirements vary by state, but include many common essential elements.
Title and deed problems potentially lead to ownership problems, and issues when selling a house with clouded title. Understanding titles and deeds and the process for transferring them legally simplifies the selling process and future ownership issues.
For more information on getting a Good Deed, contact us!