Is there a difference between deeds and titles?

| Mar 29, 2021 | title insurance | 0 comments

Buying a home is an exciting experience, but it is also stressful. With so many things to consider, you are likely to feel overwhelmed by the process. This is especially true when it comes to the closing.

In addition to submitting the proper paperwork and ensuring your financing is in order, you will also need to know the difference between the deed and title. As explained by U.S. News & World Report, these two terms are often confused.

Deed

The deed establishes that a property has changed hands from the seller to the new buyer. The document lists both parties, and must also show the signature of the seller and sometimes the buyer, depending on where the transaction takes place. There are a few different types of deeds:

General warranty

General warranty deeds are most common. They state the listed owner of the property is accurate and there are no problems with the title, such as liens.

Special warranty

Also known as a grant deed, a special warranty is typically issued when constructing a new property within a development. In this case, the title company can verify there are no ownership issues, but cannot make any guarantees regarding the larger plot of land.

Quitclaim

These deeds take place without the intervention of a title company. In many cases, they are informal arrangements between a private seller and another person, often a friend or family member. Quitclaim deeds are problematic, since they provide no guarantees.

Title

The title imbues ownership to a specific party. With the title in possession, you hold the authority to make decisions about the property. You also have responsibility for any issues associated with the property. This is why title insurance is so important, as it protects you from a range of future title problems.

There is title insurance that protects the owner of a property, as well as insurance that protects the lender providing financing. Many lenders require buyers to acquire title insurance as part of the process of receiving financing.