Deed and title are concepts in real estate. A deed is a written legal document. It helps a person to transfer ownership of a property to another. It also helps provide ownership rights to the grantee. A title is an abstract form of ownership. It helps provide ownership rights to the titleholder.
This article explores the processes involved in creating a deed and a title. It also explains the differences between the two concepts.
Deed vs Title
A deed is a written document. It provides the grantee with ownership of a property. A deed requires that the grantor, grantee, and a witness be present at the time of transfer of ownership. It requires the signature of all parties present. A deed is a public document; anyone can access it through public records. There are different types of deeds, general deeds, specific deeds, and quitclaims deeds. A deed helps by providing ownership rights, provides protection for the grantee, helps with tax purposes, etc.
A title is an abstract concept. It provides the titleholder with ownership rights to an asset. There are several processes involved in title ownership, including title search and creating an abstract title document. A title gives the titleholder right to use the property as he sees fit. It also allows the person to sell or dispose of the property. Having a title to a property helps you to acquire credit faster. In addition, investors are more interested in a property that has clear title rights. Hence, the title helps with investing purposes.
Difference Between Deed and Title in Tabular Form
| Parameters of Comparison | Deed | Title |
| Meaning | A legal document for transferring rights to a property is a deed | A legal document acting as proof of ownership is a title |
| Use | For transferring ownership | For selling property or borrowing against property |
| Form | Written document | Abstract form |
| Information | Includes information like the signatures of the grantor and the grantee | May include information like liens and encumbrances against the property |
What is Deed?
A legal document in written form that can transfer the rights of ownership from one person to another is a deed. The document should mention the term deed in front of it. The deed requires a stamp paper of value. When preparing a deed, the grantor, grantee, and a witness should be present. After the creation of the deed, the grantor signs, stamps and attests the deed in front of the witness and the grantee. Then the grantor gives the deed to the grantee. After this process, they should send a copy of the deed to the relevant authority.
Simple language is preferred for writing deeds. It should have several paragraphs. Each paragraph mentions different pieces of useful information. Every deed should contain some common information. They are as follows,
- The title of the document: deeds should mention the title deed in the written document.
- Date: a deed should mention the date of its creation.
- Place: a deed should mention the place from where you are creating the deed.
- Name, address and other essential details: A deed should mention the names, addresses and other contact details of both the grantor and the grantee.
- Terms and conditions: A deed should mention the necessary terms and conditions for transferring the property from the grantor to the grantee.
- Jurisdiction: a deed should mention the jurisdiction in which they are writing it and transferring the property.
- Signature: a deed should contain the signatures of the grantor, the grantee, and the witness.
Types of Deed
- General warranty deed: the mortgage company is responsible for drafting the general warranty deed. It provides the grantee with full rights to the property. It also mentions that the grantee does not have any knowledge of any property issues related to the property.
- Special warranty deed: you obtain a special warranty deed when purchasing a commercial property. It guarantees title ownership for the period the grantor owned the particular property.
- Quitclaim deed: quitclaim deeds help transfer ownership of a property from one person to another without any money exchange. Some examples of quitclaim deeds are, when parents transfer property to their children or when one spouse transfers ownership to another.
Benefits of Deed
Legally Binding
After a deed goes through execution and notarization, it becomes a legally binding document. As a legally binding document, it gains the quality of being enforceable in a court of law. After the grantor and the grantee signs the document, the grantor has officially passed the ownership of the property to the grantee. The grantee now has official and legal rights to the property. In the unlikely event that the grantor wishes to back out and not give up the property or move out, the grantee can take him to court.
Ownership Details
A deed mentions the names and details of the grantor and the grantee. Therefore, it provides proof of the previous owner and the current owner. A provides clear details of the current owner of the mentioned property. If in any situation the current owner has to provide proof of his ownership, all he has to do is produce the signed deed.
Public Record
Deeds are public documents. The details of deeds and transferring of ownership are present as public records. Therefore, anyone can go and look up the ownership of the property. These records help potential buyers or lenders look up the ownership of the property.
Protection
A deed is a legal document and has a public recording. This situation protects all members involved. A deed acts as a permanent record of ownership. Once the grantor and the grantee have signed the document, the ownership of the property changes from one person to the other. A deed provides definite proof of the change in ownership. It provides extra protection for the grantee in case the grantor changes his mind.
Legal Description
A deed contains all the required legal information. These details help with the identification of the property. They also help with the registration processes involved in property transfer.
Tax Uses
A deed contains all the legal information about the property. Hence, it is useful for tax purposes. The deed contains information that the property now belongs to a different person; hence relieving the previous owner of the tax payments related to the property. It also helps the current owner file taxes with all the necessary and correct information.
Transfer of Ownership
As a legal document, a deed helps in transferring ownership of property from one person to another. Without such a document, people will have no means of officially transferring properties. People could bestow properties upon another, but there would be no proof of transfer of ownership. As such, it could lead to legal battles where the previous owner's beneficiaries contest the ownership of the property. A deed helps avoid all these negative situations. Hence, it is a vital document.
Mortgage Benefits
Most people need to take out mortgages when purchasing a new property. A deed functions as legal proof of ownership of property. Hence, it can help owners acquire mortgages.
Limitations of Deed
Complexity
A deed is an extremely complex legal document. It requires the expertise of a lawyer or a real estate professional to draft. This requirement means additional fees for lawyers or real estate agents.
Expense
The preparation of a deed is a costly affair. Since a normal person cannot draft a deed, it requires the help of a legal professional. This help is a paid service. A deed also needs to be notarized. Hence, you need to take the service of a notary, which is another fee. A deed also incurs recording fees. Overall, drafting a need requires a lot of money from both parties involved.
Time
Transferring property ownership through deeds is a time-consuming process. The process requires the drafting of the deed by a person of legal authority. After the deed is drafted, the grantor, grantee, and witness need to set up a physical meeting. They all need to be present at the time the grantor and grantee sign the deed. After signing the deed, it should go to a notary. After notarization, the concerned people have to send the deed to the relevant authority. Overall, the entire process takes too much time.
Errors
A human being creates a deed. Humans are prone to errors. No matter how many years of experience and expertise a person has, no one is exempt from making mistakes. Errors can be in the form of incorrect legal descriptions, typos, etc. Any mistake present in the deed can challenge its legality. Other people can contest the ownership of a property if there are problems with the deed.
Fraud
As with every legal situation, there is a risk of fraud when dealing with deeds. The grantor may not be who he claims to be. Sometimes, he may not even have ownership of the property and hence have no right to transfer the property. Some other chances of fraud are when the does not go through the necessary stages and does not get notarized and executed.
Chance of liens and encumbrances
Sometimes a grantor may not mention any liens or encumbrances the property has. He can exclude such information from the deed. This can lead to problems for the grantee later on.
Disputes
Sometimes even if everything goes right and the grantor transfers the property to the grantee, he can change his mind. This can lead to the emergence of disputes between the grantor and the grantee.
Legality
Sometimes through errors, the deed can go improperly executed. This influences the legality of the document. If the people involved fail to get the deed properly notarised and executed it can lead to problems in the future. A deed is supposed to be a legally binding document. When there are errors, it loses this quality. Hence, other people gain rights to challenge the document and rights to the property.
What is Title?
A legal document containing proof of ownership of a property is the title. It is the right of the titleholder over the property. The title owner has certain rights to the property he owns. He can use it in any manner he wishes to he can sell the property, and control and dispose of the property. The entities that can hold a title are individuals, corporations, government entities, etc.
Features Associated with the Title
- Title insurance: title insurance helps provide the new owner with protection against any problems related to the property. In case any disputes arise over the ownership of the property, the current owner is at risk of losing the property. If he does, then title insurance can help with dealing with the situation.
- Title search: a title search involves getting information on the property. You can find out if there are any limitations to owning the property. The title search also helps you find out if the property has any unpaid liens. In addition, it helps the potential buyer, know the state of the current ownership.
- Abstract of the title: an abstract of the title is a written document. It contains information related to the previous owner of the property. It also contains information related to any past encumbrances or liens.
Benefits of Title
Proof of Ownership
A title helps the property owner have proof of ownership. If ever someone challenges ownership of the property the titleholder can just produce the title.
Helps with Transfer
Having a title to a property ensures your ownership of it. Hence, a title helps you ease the process of the sale or transfer of the property.
Helps with Acquiring Credit
Ownership of a property is necessary if you wish to borrow money against the property. Having a title to the property helps with the ownership details. Hence, a title helps with the process of acquiring credit against a property.
Legality
A title helps establish ownership of a property. Hence, it helps protect the owner against disputes against the ownership of the property. It also mentions any liens or encumbrances the owner has against the property. Therefore, in case the owner wishes to borrow any more money against the property, the borrowers will have proof of previous loans.
Investment
Assets with clear ownership information are more appealing to investors. It gives the potential investors a sense of satisfaction when the property for sale has no ownership dispute battles going on.
Limitations of Title
Expensive
Acquiring a title is an expensive process. You need to pay for legal fees, fee for title searches, etc.
Complex
Obtaining ownership of a property is not an easy task. It is extremely complicated. It can also be consuming. If the property has changed ownership multiple times and there were issues during those transfers, then it can make the process of you obtaining ownership even more complicated. Having liens against the property can also complicate the process of obtaining title ownership.
Fraud
If any form of error occurs during the process of obtaining the title it can lead to more problems. There is a risk of fraud when title ownership is not proper. If your title does not show clear and proper ownership of a property, then ownership of that property becomes open for disputes. Other people can contest for ownership.
Errors
Sometimes the title ownership to a property may contain certain errors. The property may have liens against it, judgements, or easements. The owner may not be aware of these situations at the time of acquiring the title to the property.
Limited Rights
A title provides the owner with limited rights concerning the property. They will have the right to use, and sell the property but it may also restrict certain other rights. A title owner may not have mineral rights to the property he owns. A title only gives the right to a certain mentioned area of a large property. Hence, the person will not have any right to use the adjacent land or use the water available in the nearby place.
Main Difference Between Deed and Title (in Points)
- A deed is a legal document that helps with transferring ownership of a property. A title is an abstract concept that provides proof of ownership of a property.
- A deed has a physical form. It is a written document. A title does not have a physical form. It is an abstract concept.
- The purpose of a deed is to transfer ownership of a property. The purpose of a title is to give the titleholder rights to use the property.
- Certain advantages of a deed are that the document is legally binding, provides clear ownership details, helps with tax purposes, etc. In contrast, a title has advantages such as helping ease the process of the sale of property, it brings in more investors, etc.
Conclusion
In short, a deed is a written legal document that helps with transferring ownership of a property. A title is an abstract concept that helps with proof of ownership of a property. A title often needs a deed as an evidence document of ownership. It is necessary to follow all the correct procedures when obtaining a deed or a title, to protect yourself from future disputes against property ownership.
References
- https://www.quickenloans.com/learn/deed-vs-title
- https://testbook.com/key-differences/difference-between-deed-and-title
- https://www.atlanticbay.com/knowledge-center/whats-the-difference-between-a-title-and-a-deed/
