Many people use the terms title and deed interchangeably, assuming they are the same thing. In fact, there are distinct differences between the two.
One of the main jobs of a real estate professional is to explain complicated real estate terminology. This means you must understand the difference between a title and a deed and be able to explain it in simple terms.
What is a Title in Real Estate?
A title is a concept, rather than a physical document. The person who holds the title (metaphorically) is the owner of the property. That person can sell the property or use it how they see fit. It is an essential part of property ownership, which is why title companies and title insurance are often used when closing on a home or property.
What is a Deed in Real Estate?
A deed is a legal document used to transfer ownership of the property from one party to another. In general, a deed will include the names of both the buyer and the seller, property lines, and other rights and considerations.
Different types of deeds include:
General warranty deed
Limited warranty deed
Special purpose deed
Joint and survivorship deed
Quit claim deed
What Are the Main Differences Between a Title and a Deed?
There are three main areas where titles and deeds differ: their physical attributes, their purpose, and what they include. Our diagram explains the main differences and how they overlap.
The Physical Differences Between a Deed and Title
The main difference between a title and a deed is the ability to physically hold an item in your hands. A deed is an official legal document that details who owns a property, who bought or sold the property, and where property lines are located.
On the other hand, the title is an abstract concept that covers the rights of ownership of a property.
The Purpose of a Deed Versus a Title
A deed is a legal document. Its purpose is to transfer ownership of a piece of property from one person to another. Essentially, it assures buyers the property they just purchased is actually theirs.
A title refers to the concept of ownership and covers a bundle of rights assumed along with ownership. There is no physical item to hold.
The Requirements of a Deed Versus a Title
The requirements of a deed and a title can vary by state, type of property, and ownership. In general, the deed includes who is buying the property, who is selling the property, and a description of the property (such as property lines.)
The title outlines who owns the property. For example, does one person own the entire property or does a married couple own the property together? These details impact who can buy or sell the property and how it can be used.
How to Explain the Difference Between a Title and a Deed to Clients
The best way to explain the differences between a title and a deed is to focus on the physical aspect — a deed is a physical document, while the title is the concept of ownership. Say you purchase a computer and register your ownership with the manufacturer. You can hold the physical receipt of the purchase in your hand (the deed), but you can't hold the registration of ownership (the title.)
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