Real Estate Deed Vs. Title, What is the Difference?
Updated 04/2024
In the world of buying and selling real estate, ownership transfer is at the center of it all. All the time-sensitive rules and regulations, along with the terms and jargon, can be too much for homeowners and potential buyers to sort out. Two such terms are “deed” and “title,” and we’re often asked to explain the difference between the two.
In this article, we’ll break down the differences, the power they hold, and how to ensure legal standards are met.
What’s the Difference Between a Deed and a Title?
The biggest difference between a deed and a title is that one is an actual, physical object, and the other is an abstract concept. A deed document transfers ownership from one person to another. It contains language to indicate that it’s a deed and names the new responsible party or parties. After the transfer, the new ownership is recorded with the county where the property is located.
Definition of a Title
The title indicates who has the power to enter, use, alter, and sell a property. It works similarly to a business title. A person can hold the title of “president” of an organization, which accords certain rights and responsibilities, another abstract concept. Being the title holder of a piece of property works similarly: when a deed is in your name, you are entitled to have interest in and authority over the property.
If a Title Isn’t an Actual Object, Why am I Required to Pay a Fee for It?
The lenders involved in a real estate transaction want to be sure no obstacles prevent the clear and clean transfer from a previous owner to the buyer, so a title search is performed. The fee covers the cost of the search.
The search is typically done by a professional title company or an attorney. Though in some cases a lender or home buyer may do it, the process is quite important and the documents can be difficult to understand fully, so it is recommended to leave this process to the professionals.
The search involves reviewing public records to confirm the rightful owner and learn more about the property’s ownership history and legal status. The reviewers examine documents like previous deeds, mortgages, court judgments, and tax records. The goal is to spot outstanding claims, liens, or encumbrances that could impact the transfer of the title to the new owner. A title search can take several days or weeks. The timing depends on the complexity of the property’s history and location. If issues are found, the title company works to resolve them before allowing the sale to proceed and issues title insurance to protect the new owner’s interests. A title ready to be transferred is often called a “clear title,” meaning there are no possible other claims (from other people or entities) to that same title.
Title searches also benefit the buyer by bringing to light possible problems with the deed, giving a chance to remedy them before the sale closes. Below are the kinds of problems—or “defects”— that can be found in a title search. This means the title might not be clear, and ready for transfer.
■ Easements—These are rights by a third party to access the property. For example, a city utility company could have an easement on a property, giving them access to the utility infrastructure for future improvements or repairs.
■ Liens—These could be placed on a property by a construction company or a mortgage company, for example, which is still owed money by the owner from whom the property is transferred. The lien ensures that the debt will be paid off from the proceeds of the sale.
■ Clerical errors—These are simply mistakes employees make when entering data, like an incorrect tax lot number or address.
■ Boundary disputes—These arise when a neighbor of the property being sold claims a boundary line that crosses over into said property. This calls for a re-survey to establish the lines of ownership.
All of these potential title “defects” mean there might be someone else who can claim a right to the deed in question, but it is not clear or at least not clearly defined.
What Makes a Deed a Legal Document?
Property deeds are also known as General Warranty deeds, which are legal documents that serve two purposes: 1) to legally describe the property being transferred, and 2) to name the transfer of ownership, the title of ownership, from the Grantor (seller) to the Grantee (buyer).
One thing that makes the deed legal and binding is the special language used to verify that 1) the Grantor rightfully owns the property and has the power (the title) to sell it, 2) the Grantee has the legal capacity to take on ownership, and 3) the title is clear of defects, liens, and other encumbrances, and that additional documents will be provided, as needed.
Another step that makes a deed a legally binding document is the way it’s signed. Oregon law requires that deeds must be signed by both the Grantor and Grantee with a Notary Public and then submitted to the County Recorder’s Office for official recording. Often, real estate agents wait to celebrate a sale until it is “recorded with the county” and don’t consider a property sale complete until that occurs. The property is not yet sold until it is recorded.
Types of Real Estate Deeds
You will hear of many different types of deeds used in property ownership. Here is a breakdown with definitions, starting with the two most often used most often in real estate transactions.
General Warranty Deed
● Assures the Grantor has a clear title and full right to transfer it to the Grantee
● Provides full warranties about the title being transferred
● The strong level of protection makes this the most common type of deed from sellers to buyers.
Special Warranty Deed
● Also called a Limited Warranty Deed
● Same as a General Warranty Deed except that the warranty only applies to the time period in which the Grantor owned the property. It may not cover liens or other interests the property encountered before it was taken over by the Grantor.
Quitclaim Deed
● Commonly used to correct titles or to transfer property between family members or divorced couples
● Conveys only the Grantor’s interest in the property
● Makes no guarantees about the extent of ownership or clear title
Gift Deed
● Commonly used in estate planning by transferring property to charities or loved ones
● Used to transfer ownership as a gift, without exchange of money
● Grantor receives nothing in return for the property
Survivorship Deed
● Allows property to transfer to the surviving owner(s) upon death
● Typically no probate required
Grant Deed
● Similar to a warranty deed but with more limited guarantees
● Grantor only warrants they have not personally created title defects
Bargain and Sale Deed
● Used by banks/lenders for properties sold after foreclosure
● Provides minimal guarantees beyond the Grantor’s ability to transfer
Mortgage Deed
● Transfers title to a lender as security for a mortgage loan
● After loan repayment, the title is transferred back to the borrower
● Similar to a mortgage deed but involves a third-party trustee
Deed of Trust
● Common in some U.S. states instead of a mortgage deed
Contract for Deed
● Buyer makes payments to the seller over time to purchase property
● Title doesn’t transfer until the final payment is made
How can you Protect Yourself as a Buyer or a Seller From Title or Deed Errors?
Errors can still occur during title transfers, even with the clearly stated protocols and laws mentioned above. Having an experienced real estate company on your side during your transaction can help ensure the transfer goes smoothly. Serving over twenty years in real estate in the Portland metro area, we’ve helped close thousands of deals. We know the fine points of real estate transactions because we’ve worked closely with the best title companies in the area. We can put your mind at ease and look out for your best interests from start to finish. Call our top 1% seller’s agents today at 503-714-1111, contact our top 1% buyer’s agents at 503-773-0000, or chat with the bot on our site.
