When you are buying or selling a home, you’ll want to understand property titles and deeds. The title to a house is a legal concept that establishes your ownership of the property and gives you certain rights to it. The deed is a legal document that transfers ownership of a property from a seller to a buyer. Read on to learn more!
What is a house title?
The title to a house and the property associated with a house makes you its legal owner and gives you the right to sell it. Title typically gives you the right to live in the house and use it as you please, as long as you follow the laws and regulations affecting the property. For example, zoning laws may restrict the renovations and improvements you are allowed to make to a property you own or restrict the kinds of businesses you can run from it. Finally, title usually gives you the right to decide who is and isn’t allowed to enter your property.
When one person holds the title to real estate, this is often called "sole ownership." More than one person can hold title to a property as well. One common form of title is "joint tenancy" which is often chosen by two people who are married or partners. In this case, each person shares ownership rights equally and has the right to survivorship. The right to survivorship means that if one of the partners dies, the surviving partner automatically becomes the full owner of the house and property.
Establishing that the current owner of a house holds the legal title to that house is an important part of buying and selling a home. This is usually done through a property title search.
What is a deed?
A deed is a legal document that transfers ownership of property from a seller to a buyer. Both the seller and buyer need to sign the deed and the deed must be recorded in the public records of the local county government.
A deed needs to state who the seller is (also called the "grantor") and who the buyer is (also called the "grantee"). It must contain a sufficient description of the house and property including property lines. Finally, a deed needs to comply with the laws in the community in which the property is located. Some common forms of deeds include:
- General warranty deed. With this deed, the seller guarantees they have a "clear and unencumbered" title to the property. This means their ownership of the property cannot be disputed by a third person and that there are no liens or financial claims on it. Further, a general warranty deed includes a guarantee from the seller that they will compensate the buyer if problems related to ownership or liens arise after the sale closes.
- Special warranty deed. With this deed, the seller’s guarantee only covers the period of time during which they owned the property. They do not guarantee that previous owners had a clear and unencumbered to the property or that there are no liens or financial claims on the property from previous owners.
- Quitclaim deed. This deed does not offer guarantees about ownership disputes or liens and is often used when ownership of the property is transferred without a sale. For example, quitclaim deeds may be used when ownership of a house is transferred between family members such as from a parent to a child.
Real estate agents and real estate attorneys can answer questions you have about titles and deeds, and help you understand what you need to know when you are buying or selling a house!
Last reviewed and updated October 2021 by Freedom Mortgage Corporation