The Differences Between a Property Title vs. a Deed
If you are a brand-new home buyer, or are selling a house for the first time, you may be working with a real estate agent who has bandied around the terms “deed” and “title” in conversation. You may have a basic idea of what these terms mean, but it is important to know what is what. Especially when speaking with agents, lenders, and title companies. The differences between a property title vs. a deed are small, but crucial.
What is a property title?
Most importantly, a title is a concept. It is essentially a term that means you have a legal right to property ownership.
If you have just bought a house, or are about to sell a house, you currently have title over that property. This means that you have the right of possession because the house belongs to you. It also means that you have the right to control what happens in the property, as long as it isn’t against the law. You get to decide who can and can’t enter the property, you are allowed to enjoy yourself on your own premises (legally, of course!), and you also have the right of disposition. This last concept is a bit more complicated, but essentially, it means that since the property belongs to you, you are at liberty to sell it if you would like–with a few exceptions. To read more about different types of title ownership, click here.
How does “clearing a title” work?
If you are selling your home, you will need to make sure there are no outstanding property debts, creditor judgements, or bankruptcies that will hold you back from being able to transfer the title to a new buyer. A new buyer will not want to take on any collateral from a title defect. If you can clear your title of any previously unpaid taxes, mistakes from earlier paperwork errors, or any unpaid debts on the property, you will have a much easier time selling. Depending on what needs clearing, you may be unable to sell until you sort out some of these defects.
If you are a buyer, it’s worth paying for a title search on your prospective property to see whether or not there are any liens held against it. In many cases, the buyer’s lender will require a title search as part of the purchase process. However, you are perfectly within your rights to order one yourself. Doing this could help you make a decision on whether or not you’d like to purchase. An uncleared title can render a property unsuitable, and sometimes even illegal for purchase.
In Wisconsin, real estate agents do not do title searches when listing a property. However, if a title search occurs, they may be required to disclose any issues in the listing.
Title and gap insurance is also something to consider. Occasionally missed liens or other title issues can crop up, even after title companies have completed all of their due diligence. Insurance can help cover the cost of any legal issues that could occur. Some lenders may require title and gap insurance as part of the purchase process. To be honest, even if they don’t, you’d be a fool not to get the coverage! Click here to watch a video about what can happen if you don’t have title insurance.
Okay, so what’s a deed then?
Of all the differences between a property title vs. a deed, the biggest difference is that the deed is a physical document. It is a tangible certificate that explains all of your title rights. It is the paperwork that officially and legally transfers property ownership from the seller to the buyer. The deed contract will also give a complete description of the property. This will include the property lines and other physical information about the house. It must be signed by both the buyer and the seller in order for it to become official.
A warranty deed should disclose everything there is to know about a property. It should also impart any restrictions or any information about the history of the house. For example, if the house is in a historic part of town, this could impact any future remodelling. The deed must include this information. If there are any recurrent disturbances or smells, if there are problems with nearby neighbors, or if a violent crime has been committed in the property, this must be communicated to the potential buyer.
Once the title has been transferred to the buyer, the deed will be the sale’s physical representation. The title legally represents your claim to a property. The deed gives you the documentation you will need in order to sell the property onwards. The differences between a property title vs. a deed are subtle, but both are crucial to the real-estate process.
Who can help with titles & deeds?
We can! At PropShop Homes, we’re a little different from your average buyer. There are several reasons why selling to a professional investor like us can be a huge benefit! For example, we have no problem working with sellers to help clear their titles when we buy their property. We are here to help and guide you in your real-estate buying and selling adventures. We know that for new homeowners and new sellers that things aren’t always straight forward. Don’t hesitate to contact us. We are here to help!