Deed vs. title: What’s the difference?

When buyers get closer to the end of the homeownership journey, they will most probably come across the terms "deed" and "title." While they are related, these two concepts have significant differences between them. Let's take a closer look at what those are and talk about the intricacies of deeds and titles for buyers and sellers.

House title vs. deed, explained

A title and a deed are both concepts that refer to property ownership. A deed is an official document that transfers property ownership from a seller to a buyer. By contrast, a title is an intangible legal concept that describes ownership of the property and responsibilities that come with it. When a buyer receives a deed, they simultaneously take on the title to the property.

What is a deed?

As mentioned earlier, a deed is a physical document signed by a seller (grantor) and a buyer (grantee) that may serve as a confirmation of ownership. It may include a general description of the property, details of both parties and their signatures. Typically, a new homeowner receives the deed at the time of closing or right after it, and to be legally recognized, it should be filed with the local government. Some common types of deeds include:

• General warranty deed: A general warranty deed is what people usually imply when referring to the concept of the deed. With this deed, a seller provides a guarantee to the buyer that there are no outstanding claims or liens against the property. A general warranty deed is typically the deed homebuyers may receive when closing on a purchase.
• Special warranty deed: While it's somewhat similar to a general warranty deed, it only accounts for the period during which the seller owned the property and not the entire ownership history. Also, it doesn’t protect against any claims or liens filed before the seller purchased the property. 
• Quitclaim deed: This type of deed is generally used to transfer property ownership between trusted family members; for example, to your spouse or adult children. The quitclaim deed transfers the ownership of a home "as is" without the need to go through a traditional sales process and does not come with any warranties.
• Deed in lieu of foreclosure: A deed in lieu of foreclosure is an agreement between the homeowner and their lender in case they can no longer afford their mortgage payments. In this situation, the ownership of the property is transferred to the lender (usually, the bank). For the homeowner, it might allow them to avoid foreclosure and free them from the loan. Please consult with a real estate attorney for more information.

What is a title?

Let's look closely at titles and how they work in real estate. A house title is a concept that sums up someone's ownership and the rights that come with it. These rights can include the right of possession, control and disposition, among others. There are multiple ways to hold the title, such as:

• Sole ownership: As the name suggests, sole ownership is when one person owns the property. If one individual holds a property title, they can manage the property (sell, gift or bequeath) at their discretion without consulting anyone else.
• Joint tenancy: This type of legal arrangement allows two or more people to own a property together, each of them having equal rights and obligations. One owner cannot sell the property without the consent of other parties, and if one person dies, their right of ownership is automatically transferred to the surviving owner. Joint tenancy may be established between married and unmarried couples, family members or business partners.
• Tenancy in common: Under this form of ownership, two or more people can hold the title to the property, but each of them owns only a specified share, which they can manage at their discretion. For example, if two people hold tenancy in common, one of them can gift or sell their share without consulting a second owner. Please consult with a real estate attorney for more information.

Deed vs. title: main differences

While closely related, these concepts stand for two different things and cannot be used interchangeably in many situations. Aside from the physical aspect, there are some other differences. Here’s a closer look at them.

Intent

A person who holds the title is considered the owner of the property and the holder of all the rights that come with this title. A deed may serve as physical proof of title transfer and indicate the new owner's name.

Role in the process

Before it's possible to close on the home, a real estate attorney or a title company performs a title search. This process determines the property's legal owner and verifies whether there are any outstanding claims to the property. If there are no major issues with the title, a closing agent prepares all necessary documents for closing, including the deed.

In summary

While the two terms may be related, there is a distinct difference between a deed and a title. A deed is a legal document that identifies the owner of a property, while a title is a term used to describe a bundle of rights that come with this ownership. Generally, a homebuyer receives a title and a deed during the closing or right after it.

Some real estate concepts may seem confusing and intimidating, especially for first-time homebuyers. But, if you ever feel like you need help, you could reach out to an expert, such as a title agency, to help clear your doubts.