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Deeds, Titles, and Title Insurance – What Does It All Mean?
Apr 17, 2021
Deeds, Titles, and Title Insurance – What Does It All Mean?
In the realm of real estate transactions, there is nothing more confusing to most people than two commonly used terms: title and deed. Toss in the use of title insurance as part of a property sale transaction and the picture only becomes less clear about the difference between title and deed. Real estate lawyers in Bryan TX advise that there are different types of deeds, each one serving a different purpose in determining the legal ownership of property; however, there is only one property title that shows legal ownership.
Deeds and Titles – What Is the Difference?
Though they seem like one in the same, deeds and titles are different documents that serve very different and significant purposes. Under the most simple and normal circumstances, the same person (or couple if married) will be listed on both documents.
- Title – This is the legal relationship between persons and property; it shows ownership that no one else can claim and controls, possesses, and disposes of the property. The holder of the title has the right to use the property as desired and legally allowed. It is a document used in registered land systems based on the Torrens system where the government keeps track of all encumbrances that affect a property and guarantees all encumbrances are listed on Certificate. According to Bryan TX lawyers, ownership is evidenced by a deed, probate, or court order.
- Deed – This document is the means by which the title is transferred from one owner to another, the channel through which rightful ownership passes. A deed must be in writing, properly executed, and recorded in land records; it is evidence of a title.
Different Types of Title Forms
This document that serves to show the names of the real property owners comes in different types according to lawyers in Bryan Texas, each of which serves a different purpose.
- Tenancy –
Each person on title owns interest in the property. A tenant can sell only their interest in the property but not all of the property. Upon death, interest in a property transfers to heirs.
- Joint Tenancy –
Every person listed on the document owns the property jointly. Upon death, interest transfers to other owners who have the right of survivorship.
- Tenancy by Entirety –
Used in states where property is owned by a husband and wife acting as one unit, both having full and undivided interest. Upon death, individual interest can only pass to heirs if both sign the deed.
- Community Property –
This is used in community property states where both spouses are equal partners and share equally in everything acquired during marriage. There is no right of survivorship and a will is only way to determine what happens to a spouse’s share of the property.
Different Types of Deeds
Just as there are different types of titles, there are also different types of deeds.
- General Warranty – Seller guarantees the right to transfer title, that the title is free and clear of any encumbrances, and the seller will handle any liens or encumbrances that appear or pay buyer for any losses incurred if the title cannot be established as clear and transferable. Covers from first sale of house to current sale and this does allow title insurance to be purchased.
- Special Warranty –
Only covers the period of time that the seller had the title; seller would be responsible for any liens or encumbrances. The seller is not responsible for any time frame other than when owning this property.; does allow for the purchase of title insurance
- Deed Without Warranty –
This document states that the seller has title; however, there are no guarantees about liens and the buyer would have to pay for any legitimate liens.
- Quitclaim –
There is no guarantee at all, the seller only conveys the sellers' interest in the property at the time of the sale. This form is not insurable for a 25-year statute of limitations time frame.
- Deed of Trust –
Also known as mortgage; this document provides the lender/lienholder with remedies if borrower defaults as a form of protection for the lienholder. A mortgage has two parties, the borrower and the lender; a deed of trust has three by adding a trustee. The borrower is the trustor, the lienholder is the beneficiary plus the trustee (usually a title company) who holds title until the loan is paid.
- Promissory Note – This is the document which the buyer signs with a promise to repay money borrowed.
Though both documents typically state complete ownership of a property, real estate lawyers in Bryan TX agree that it is important for the status of any deed to be confirmed before finalizing any purchase agreement.
Quitclaim and Warranty Deeds
Where issues of ownership get a little complex is with different deed types, each meaning something specific in relation to the ownership and use of property.
- Quitclaim Deed – Frequently mistaken as quick-claim and assumed to mean a faster real estate transaction, that concept could not be further from the truth. Quitclaim means that the seller states upon signing over ownership of a property that they may or may not actually have a legal claim on said property – but if they do, somehow, they are agreeing to give it up. Per lawyers in Bryan TX, this document is useful when it is essential to clear other from existing deeds so a clean sales transaction can happen, and a legal deed can then be transferred to the new buyer. Without it, someone could conceivably approach a new owner and claim they never agreed to give up their portion of the claim, which would likely bring about a legal situation.
- Warranty Deeds – Preferred in a typical real estate transfer of ownership, warranty deeds state that the current claimant has not done anything that compromises their actual ownership of a property (such as default on the mortgage), and the legality of their claim to that ownership. Sellers can use a General Warranty that they are legal owners of the entire property and are unaware of any previous claimants to that right; they can also use a Special Warranty stating that they are not aware of anything that would indicate there are other parties holding interest in the property, though such individuals could exist.
Because ownership, investments, right to use, and many other property details can change over the years, researching the legal status of a property’s deed requires some detailed work. Assuming it is safe to proceed without verifying this information might be appropriate in some cases yet be problematic in others. This is one of the specialty areas of law that real estate lawyers in Bryan TX handle. Prudent real estate buyers should consider enlisting the services of an attorney to prevent future ownership-related difficulties.
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