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Terms You Must Know: What's the Difference Between a Title and a Deed?

Monday, April 13, 2020

About 5.34 million homes get sold each year. For many people, this is the largest purchase or sale that they'll make in their lifetime. When a large amount of money is changing hands, everyone wants to protect their investment. 

One way to do this is by knowing the difference between a title and a deed. These two terms get used interchangeably, but they actually mean different things.

Read this guide to understand what a title and deed are. 

Difference Between a Title and a Deed

A title is a legal way of saying you have rightful ownership over a property. This is why you hear about a title for real estate, automobiles, trailers, and motorcycles. 

A deed is a legal document that transfers the legal ownership from one owner to another. This is a physical document that all parties sign to memorialize this transfer. 

Physical Differences 

A deed is a physical piece of paper that outlines the agreement. A title is a concept that doesn't have a physical existence. 

Their Purposes 

The purpose of the deed is to act as evidence of a transfer of ownership. It also proves your right to turn around and sell the property to another buyer. 

A title gives you the right to modify and use the property. The title gives you the authority to make decisions and control the property. 

The Title Search 

When a buyer becomes interested in a particular piece of property, they'll have a title search performed. The lender typically does this search. 

The search will consist of going through all public records to look for proof that the seller has a right to transfer the property. The first step is to look for deeds that prove a legal transfer of ownership from one owner to the next. The other part of the search is to confirm the property is free of personal property disputes, claims of possessions, and liens. 

If everything checks out, then the sale of the property can go through. The buyer's title company will record the newly signed deed with the county office where the property is located.

Purchasing Insurance 

Even if your title company performs the most thorough search possible, there's still a chance for title problems to pop up. These issues can be expensive to resolve, and you could potentially lose your purchased property. 

Title insurance protects your claim and insulates you from financial loss. It will protect you from undiscovered title issues such as defects, fraud, unknown encumbrances, liens, or any other claim to your property. 

Protect Your Rightful Ownership 

If you're planning on buying or selling your property, then you need to protect yourself. This is the largest monetary transaction that most of us experience in our lives. 

Knowing the difference between a title and a deed will ensure you understand the process. It will also help you buy the proper insurance to protect your investment. 

Protect your title today by choosing the perfect title insurance policy today.

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