For anyone involved in a real estate transaction, it’s essential to understand the difference between a deed and a title. Both documents are incredibly important to the buying and selling process, but for very different reasons. Read on to learn more.

What is a deed?

Both deeds and titles are legal documents. However, there are some key differences. A deed is a legal document that changes hands when the property is transferred from one owner to the next. It will thoroughly detail the property lines and any other important details about the property. At the closing, the signing of the deed is witnessed before it gets to the buyer. Both signatures are necessary to make the document legally binding.

What is a title?

A title is a piece of documentation that says who legally owns the property described in the deed. The title is a critical piece of the overall real estate transaction. So how does a title vary from the deed? Well, the most significant difference is the physical component. While the deed is the official written document stating a person’s legal ownership of the property, the title refers to the concept of ownership rights. While a seller may possess the deed paperwork, that doesn’t necessarily mean they have the right to own the deed, and ultimately the property.

Verifying a Title

For a title to be “clear”, a title company is hired to do the vetting and perform a title search. This process searches the history of the title and makes sure there are no liens, outstanding mortgages, judgments, or other issues that may jeopardize the sale of the property. The goal is to ensure the buyer will own the property free and clear. The title company will also guarantee the verification through title insurance that the buyer can purchase. Title insurance protects both the lender and the owner in case a claim to the property surfaces.

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