A property/house title is a concept rather than a physical document that gives a property owner legal rights over a home or property. It offers an individual/individuals the legal authority to use, improve, or even sell/transfer the property. A home title goes along with a deed which is a legal document showing the transfer of a property from a seller to a buyer.
Many people use the terms deeds and titles interchangeably. But, a deed describes the property, and both the seller and buyer must sign it.
This article takes you through essential facts about a property title, the differences between a deed and a title, and different ways of holding a title. We also highlight the different types of deeds in real estate. Read on!
Essential facts to know about a property title
A home/property title gives information on legal ownership of a home or property and if there is anyone with a claim over the same. A person selling a property may not necessarily be its legal owner, and it is thus essential to know the crucial facts about a home title. The following factors are worth knowing;
1. The need for a title insurance
When you are purchasing a house or a property, you need the assurance that you will legally own it. It would help if you bought title insurance to protect you and the lender against any problem that may arise after the search. Two types of title insurance exist, i.e., lender’s and owner’s title insurance. When you have these policies, the insurance firm gives the lender and the buyer legal aid in case of a dispute or problem.
2. Why a title search is crucial
A title search is crucial, especially before a prospective property buyer can start buying. This search helps you establish the property’s genuine owner and ownership history. You will also know if the property has any liabilities, such as unresolved tax issues. A title search helps to disclose information about liens and other obligations by the property owner.
Different types of liens exist. The table below is a summary of various liens.
|Type of lien||Description||Purpose of the lien|
|Bank lien||It is granted when a property owner takes a bank loan to purchase it.||It gives the bank the right to repossess the property and recover unpaid debt.|
|Judgment lien||This lien arises from a lawsuit when a court rules in favor of a creditor.||A creditor gets the mandate to possess a debtor’s property if they default on payment.|
|Tax lien||A government agency can put a lien on a property for overdue taxes.||Helps the government agency to recover unpaid taxes from property owners|
|Mechanics/construction lien||A construction firm files for this lien when a property owner fails to pay for supplies or completed work||It helps the construction company to get compensation for any breach of contract by the owner of the property.|
3. A title averts legal property dispute
Since a property title proves the legal ownership of a house or property, it helps to resolve any disputes that may arise. A property title will disclose all the legal owners of a property and prevent one person from selling it against the will of the others.
4. You need to keep your title securely
A property title is crucial, and there’s a need to keep it in a secure and safe place. You can ensure your title’s security by keeping it in a safe or safe deposit box at the bank.
5. What happens when you sell your home/property?
When you sell your property, one of the requirements is to transfer the ownership to the buyer. The buyer receives a copy of the title, giving them a legal right to own the property. You also forfeit your rights over the property, and your title becomes invalid.
What is the difference between a title and a deed?
A property/house deed is a legal document that a real estate attorney draws to transfer ownership from a grantor to a grantee. Most states require that a grantor gets the deed notarized and deliver it to the grantee. A grantee can only accept an deed after ensuring that the property has no liens (after a title search).
A property deed;
- States that it’s a deed
- Describes the property an individual(s) is selling
- Shows the grantor’s and grantee’s names and addresses
- Has the property seller’s signature
On the other hand, a property/house title is a legal concept that gives you the right of ownership. It grants you the right to transfer the property and use it as you wish. A house title also gives you the rights of possession, control, disposition, enjoyment, and exclusion.
With a property/house title, you can use, sell, transfer ownership, rent, and decide who enters the property.
What are the different ways of holding a property/house title?
Several ways exist in which a property owner can hold a title, including
Sole ownership means that the property belongs to you alone. This title makes it easy for you to transfer a property to another individual. Sole ownership is common to single men and women, legally divorced persons, and married people wishing to acquire properties separately.
TBE (Tenancy by Entirety)
This type of property ownership is for legally married couples only, and it gives them equal rights on the property. The arrangement views a couple as a single legal entity and provides each spouse with a right to survivorship. A spouse takes full possession of the property upon the death of their partner.
With TBE, both parties must agree before transferring or selling the property.
Two individuals (friends, relatives, or couples) may own property under a joint tenancy. Each party in a joint tenancy has equal rights over the property, including survivorship rights. A co-owner’s heirs cannot have a claim on the property if one party dies, but the surviving individual becomes the automatic owner.
Joint tenancy ownership requires that if all co-owners die, the property goes through probate. This process helps to establish the new legal property owners.
Community property (marital property)
You can hold a title through community property during your marriage as a couple. In this arrangement, each spouse has equal rights and can transfer their shares at will.
Tenancy in common
A Tenancy in common grants property owners equal rights during their lifetime. Tenancy in common differs from joint tenancy in that each individual holds the title for their share. You can also dispose of your share when you wish.
A living trust
A living trust is also called revocable, loving, or inter vivos trusta. In this arrangement, a property owner can transfer the ownership to a legal entity (trust) while retaining its control when alive. The property owner signs a written document establishing the trust, and a notary public serves as a witness.
Upon the property owner’s death, the beneficiary takes up ownership without going through probate.
What are the different types of property deeds?
There are diverse types of property deeds serving different kinds of purposes, including;
General warranty deed
A general warranty deed confirms a property seller’s ownership and the right to sell it. It also guarantees that the said property has no liens, encumbrances, or unsettled debts. This type of deed helps to protect a buyer and gives them legal recourse if an issue arises.
This deed transfers ownership from a grantor to a grantee in exchange for a price they have agreed upon. A grant deed confirms that the seller is the legal property owner but doesn’t give the buyer legal protection. If you are the buyer, you will not get protection from issues arising from wrong signatures, public record errors, disputes in boundaries, or undisclosed liens.
Special warranty deed
This deed protects a buyer against any claims that might have come up during the period a seller possessed the property. A special deed will not apply to the property’s entire history but guarantees the seller’s ownership and that it didn’t have any liens during this period.
A mortgage deed is also known as a mortgage agreement. It is signed between a lending institution or a bank, and a property owner. This legal document allows the lender to put a lien on the property in case of failure to repay a loan, and it secures the said property as collateral for the loan.
The financial institution holds the property’s legal title for the whole period of the loan.
A quitclaim deed is applicable in transferring property from one family member to another. This deed provides little protection to the beneficiary of the transfer. If you are the grantee, you have no legal protection against any encumbrances or liens, and you cannot take any legal action if you find out that the grantor is not the property’s legal owner.
Key takeaways and insights
A house/property title is a concept of rights other than a document. It gives you the right of possession, right of control, and right of exclusion. A property title enables you to use or transfer your property as you wish as it makes you the legal owner.
When buying a property, it is necessary to conduct a proper title search to establish if it has any liabilities.