Deed and title. They’re two of those real estate jargon terms everyone thinks they understand…but do they really? Some people tend to use the terms interchangeably, but there’s actually a significant difference. Let’s take a closer look.

Deed vs. Title

Deed is defined in the dictionary as “a legal document that is signed and delivered, especially one regarding the ownership of property or legal rights.” It’s an actual, physical document that is signed by both the buyer and the seller of a property.

Title, on the other hand, is “a right or claim to the ownership of property.” It’s just the legal way of saying you own a property and have the rights to use it. As a key to remembering what title means, you can associate having title of something to being “entitled” to its use.

Think of it this way. A deed is a physical legal document that confirms or conveys ownership. The title is the abstract concept of the legal right to use the property. When you buy real estate, you’ll receive the deed, the official document that gives you title to the property. Now that we have that cleared up, let’s look at a couple of other terms you should know.

So What’s a Title Search For?

Before closing, your lender will order a title search to make sure the owner has the legal right to sell the property to you. As long as the all clear is given, the seller can transfer title to you through the deed. The deed will then be recorded at the county assessor’s office or courthouse, after which you officially have the deed and title to your property.

What About Title Insurance?

Instead of insuring you against something that could happen in the future, title insurance protects you against something that might have already happened, the proof of which could arise at any time. Even though a title company has done its due diligence in declaring a title to be clear, there’s always a very small chance that something might have slipped through the cracks somewhere over the years. For instance, there could be a lien that was filed in such a way that it was easy to miss; or a distant relative or ex-spouse could claim that they have a stake in the property. Having title insurance protects you and your lender from any financial loss. While these instances are rare, they do happen from time to time. Title insurance makes it a little easier on the owner and the lender.

Do you have more questions about deeds, titles, and title insurance? Be sure to contact your trusted Johnson & Wilson Real Estate agent for a more personalized explanation!