What’s the Difference Between a Deed and Title? (2024)

A title and a deed are two distinct things that go hand in hand when selling a home. So what’s the difference between a deed and title?

You may be under the impression that a title and a deed are the same. While they are similar, the distinctions are important to be aware of, especially when selling a home. Here is the role of each one and why they both have a purpose. The difference between a deed and title is important.

What is a title?

A title is the legal term for your ownership of a home. The title enables you to sell the home or transfer all or a portion of your interest in the property. It is not a physical item, but a concept that indicates who holds the bundles of rights to a home.

Bundle of Rights

If you are the title holder, it means that you hold certain rights pertaining to the property you own. These include:

• The right of possession
• The right of control
• The right of exclusion
• The right of enjoyment
• The right of disposition

Title Insurance

Title insurance serves to protect buyers and lenders from financial loss due to title defects. These may include liens, back taxes, past building code violations, and any other forms of debt that the buyer and the lender wouldn’t want to inherit from the seller.

You can think of title insurance as protecting against the home’s history, rather than events in the future. Most of the time, lenders require that borrowers purchase lender title insurance, which is distinct from owner title insurance. Buyers may wish to purchase both for complete protection.

What is a deed?

If a title is the legal concept of ownership, then what is a deed? A deed is the document that verifies this ownership. The deed is the vehicle through which a title is transferred from one party to the next. There are different types of deeds that may be used.

General Warranty Deed

A general warranty deed is a common type of deed that indicates that you, the owner, have a right to sell the property and a clear title. It indicates that you are the sole person who has rights to the property, meaning that you have the full title.

Special Warranty Deed

A special warranty deed is different from the general warranty deed, in that it only guarantees that your portion of the title is clear. It doesn’t verify that previous owners were free of title discrepancies. This type of title is more common among commercial properties as opposed to real estate.

Grant Deed

As the name implies, a grant deed doesn’t come with a warranty. It serves to prove that you have a clear title to the best of your knowledge and that a right to sell. However, it does not protect against someone who tries to assert a claim to the property once the sale has closed.

Quitclaim Deed

White a grant deed may seem significantly more risky than the warranty deeds, it offers more protection that a quitclaim deed does. A quitclaim deed effectively transfers your title to the buyer, but it does not ensure that you may do so.

You can sell the property regardless of if you had the legal right to do so. Any complications that arise thereafter fall on the new owners shoulders because you didn’t provide them with any warranties. These deeds are often only used when there is a trusting relationship between the buyer and the seller.

Bargain and Sale Deed

A bargain and sale deed is typically used if your home is sold through a foreclosure or a tax sale. Since both scenarios involve payment failures on behalf of the seller, it makes sense that this type of deed does not clear the title. As a result, the buyer is responsible for resolving any lingering title imperfections that come along with the sale of the property.

Which is more important: title or deed?

Both the title and the deed are of equal importance because they both have a purpose in the home selling process. For instance, a title search can note only confirm who owns the property, but also lists any liens, loans, or property taxes due.

The deed specifies who owns the property and to what extent. It is a physical document that lays out the terms of the agreement.

Quicken Loans explains an easy way to think of the difference between a title and a deed is to compare it to a book. “Although you can own a physical copy of a book, you can’t hold the book’s title in your hand.”

Does a deed mean you own the house?

Put plainly, yes, a deed does mean you own the house. However, if you take out a loan to buy the house, then the lender owns the deed until the loan is paid off.

Some buyers may also opt for a Contract for Deed, in which case the buyer makes payments to the seller, and the seller retains the deed until the property is paid off.

Who holds the deed to your home?

As is evident in the case of a Contract for Deed, who holds the deed depends on the way in which the buyer goes about attaining the property. Outside of the loan holder or the seller temporarily retaining the deed, a third party may also hold it through a deed of trust.

Deed of Trust

A deed of trust is an agreement between three parties: a lender, a lendee, and a trustee. The borrower attains the loan by offering the lender one or more promissory notes. Meanwhile, a third-party trustee holds the deed until the loan is paid off.

In some states, a deed of trust is used in place of a mortgage. The predominant difference between the two is that a deed of trust involves a third party trustee. This trustee would be responsible for starting the foreclosure process in the event the borrower defaults on their loan.

What is the purpose of a deed?

So you know what a deed is, but what about its actual purpose when it comes to selling your home? The deed acts as a guarantee that you own the home outright, meaning there aren’t any clouds on the title. Clouds can include things like claims or liens that compromise the title.

Once it’s time to sell your home, you can transfer either part of the title or the entire title via a deed. The deed is delivered during closing.

The deed also plays a role in the lending process, as it may not go directly from the seller to the buyer but to a third party in the interim. In this sense, the deed plays a role in helping to ensure that a loan is paid off.

So, what’s the difference?

A title and a deed are distinct in that one is a concept and the other is a document. A title indicates that you own the home, while a deed is proof that said ownership was transferred. UpNest, whichis owned by parent companyRealtor.com, can help you find the perfect Realtor to ensure that your home is smoothly transferred to the next owner.

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