Oct 11, 2019 What’s a Property Deed, and How’s It Different Than a Title?

“Deed” and “title” are very common words in real estate, and they are also very misunderstood. People often mistakenly use the words interchangeably, even though they mean very different things.

What are deeds, and what should homeowners know about them?

A title represents ownership of property, while a deed is the vehicle that allows for ownership to be transferred.

One of the easiest ways to understand the difference between a title and a deed is this definition: a title is the actual ownership—the act of owning a property by “holding the title”—while a deed is the vehicle that delivers the ownership from one party to another.

If you hold title to a property, you own the property. Holding the title represents that you own a piece of property, and consequently have certain rights and responsibilities. But this is a concept, not a physical instrument. There is no piece of paper or other physical object which represents the title.

In contrast, a deed is a piece of paper you can physically hold in your hand. If you want to transfer the title of a property from the current owner (a grantor or seller) to the new owner (a grantee or buyer), you must use a properly executed deed.

What makes a deed legally valid?

You can’t just scrawl “I, Martha Jones hereby transfer ownership of 123 Hill Street to John Smith,” sign it, and consider that to be a title. For a title to be legally valid, and successfully transfer the ownership of a property from one party to another—from the grantor to the grantee—a deed must contain certain elements:

  • It must be in writing. However, there is no legal requirement that a deed follow any particular form, as long as it contains the necessary information.
  • The parties must have legal authority and capacity to transfer and receive the property. The owner of the home must have the right to sell it, and both the owner and receiver of the property must be of sound mind.
  • The property must be clearly described, with the description including the assessor’s parcel number (APN) assigned to the property.
  • Both parties must be appropriately identified.
  • Specific language of conveyance of ownership must be present.
  • It must be signed by the grantor(s) with ownership interest.
  • It must be delivered to the grantee(s).
  • The grantee(s) must agree to accept the property.

Are all deeds the same?

The quick answer is no. There are different types of deeds that transfer different types of ownership, and it is important to know the specifics.

For most property transfers, a title attorney or title company will perform a title search to identify any and all information pertinent to the property. This is typically done at the county clerk’s office in the county where the property is located. This includes the recorded deed itself, and any recorded liens on the property to ensure the title/ownership of a property can be delivered “free and clear” of any encumbrances.

Deeds are categorized into the type of warranty provided by the grantor. While most properties are transferred under a general warranty deed that provides maximum protection, there are also special warranty deeds, quitclaim deeds, and a variety of special purpose deeds.

Do all deeds transfer complete ownership of the property?

No. Years ago, the ceremonial act of transferring property ownership was called a “livery of seisin,” where one party handed to the other a twig or piece of turf, accompanied by a verbal or written statement. Today, deeds are a bit more formal and specific, but it is important to understand the concept of the bundle of sticks—that at that time, those sticks represented that the receiver received all rights associated with the land.

Every property has a variety of rights attributed to the ownership, including land rights, water rights, airspace rights, mineral rights, timber rights, usage rights, and so on.  If you own all the rights to the land in the purchase, you are said to have the full bundle of sticks. These sticks (rights) can be sold as a whole, or separately, and the recorded deed will indicate the specifics.

How does a homebuyer ensure that the title and deed are handled properly?

Fortunately, the title search, deed preparation and closing are all typically handled by the closing company assigned by the lender. The cost of the work is the responsibility of the parties in the transaction, but they do not need to do anything to ensure the work is performed as needed. The closing company provides lender’s title insurance for their work, and a buyer can purchase an additional title insurance policy if they would like additional protection against title defects.

PMG will work with you to balance your homebuying goals...

...against your financial circumstances, and help you identify the mortgage loan that best meets your needs.