Deeds vs Titles in Real Estate: What are the Differences?

Updated on March 26, 2024

Do Deed and Title Mean the Same Thing?

In the realm of real estate, the terms “deed” and “title” are often used right next to each other, but they actually refer to distinct legal concepts.

Understanding the difference between these two elements is crucial for anyone involved in buying, selling, or owning property.

Let’s explore the nuances of deeds and holding title, explore their various types in commercial and residential real estate, and address why people often confuse the two.

Deeds

A deed is a legal document that transfers ownership of real property from one party to another.

It is a crucial part of the real estate transaction process, as it formally conveys the property rights from the seller (grantor) to the buyer (grantee).

Deeds typically include a description of the property, the names of the parties involved, and any conditions or restrictions associated with the transfer.

A deed can also be used to convey a lesser interest than full title, for example you can use a deed to convey an easement.

5 Types of Deeds

1. Grant Deed: This type of deed offers the highest level of protection to the buyer, as the seller affirmatively represents that they have clear title to the property.  In California, the title companies generally prefer a grant deed when they are examining title.

2. Special Warranty Deed: With this deed, the seller guarantees that they have not done anything to impair the title during their ownership of the property. However, they do not provide protection against claims that arose before they acquired the property.

3. Quitclaim Deed: This deed offers the least amount of protection to the buyer, as the seller simply transfers whatever interest they have in the property, without making any guarantees about the validity of the title.  They basically say, I am giving you what I have but I am not verifying what I have.

4. Sheriff’s Deed: This deed is used to transfer property that has been foreclosed upon, typically as a result of non-payment of a mortgage. The sheriff’s deed transfers whatever interest the foreclosed owner had in the property to the buyer.

5. Trustee’s Deed: This deed is used to transfer property held in a trust to the beneficiaries of the trust.

Uses of Deeds:

• Transfer of Ownership: The primary purpose of a deed is to transfer ownership of real property from one party to another.
• Establishing Ownership Rights: Deeds are used to establish and prove ownership rights to a property.
• Recording Ownership: Deeds are recorded in the public records to provide notice to the world of the change in ownership.  California uses race-notice statutes which grant priority to liens and ownership interest based on who records the interest first.
• Securing Financing: Deeds are often used as security for loans, such as how eloans, where the lender holds a lien on the property until the loan is repaid.

What is a Title in Real Estate?

Title refers to the legal concept of ownership rights to a particular piece of real property. It represents the bundle of rights that come with ownership, including the right to use, possess, and transfer the property.

Title is not a physical document but rather a legal concept that is evidenced by various documents, including deeds, surveys, and title insurance policies.

Types of Titles:

• Legal Title: Legal title refers to the actual ownership of the property, including the right to possess, use, and transfer the property. It is typically evidenced by a deed.
• Equitable Title: Equitable title refers to the right to obtain legal title to the property, typically through a contract for sale, such as a purchase agreement.  Sometimes people hold title for others who are not on title for reasons like bad credit, the people who claim a beneficial ownership interest in the property in those instances may not hold bald legal title.

Common Uses of  Title in Real Estate

• Ownership Rights: Title establish ownership rights to a property and the bundle of rights that come with ownership.
• Risk Management: Title is used to manage the risks associated with property ownership, such as by obtaining title insurance to protect against defects in the title.
• Legal Protection: Title provides legal protection against claims by others to the property, such as by establishing priority of ownership rights.

Deed and Title: Differences and Confusion

The key difference between a deed and title is that a deed is a legal document that transfers ownership of property, while a title is the concept of ownership itself.

In other words, a deed is the written instrument used to convey title from one party to another. While this may seem straightforward, the confusion often arises due to the complex nature of real estate transactions and the various documents involved.

One common source of confusion is the belief that receiving a deed automatically guarantees clear title to the property. While a deed is necessary to transfer ownership, it does not guarantee that the title is free from defects or claims by others. This is why title insurance is often obtained to protect against such risks.

Another source of confusion is the use of the term “title” to refer to the physical document that evidences ownership, such as a certificate of title or title deed. While these documents are important for proving ownership, they are not the same as the legal concept of title.

In summary, while deeds and titles are related concepts in real estate, they serve distinct purposes. Deeds are legal documents that transfer ownership, while title is the legal concept of ownership itself. Understanding these differences in deeds vs titles is essential for anyone involved in real estate transactions to protect their interests and ensure a smooth transfer of property.

Over the years, the real estate attorneys at Schorr Law have encountered many cases in which disputes arise during the process of transferring property from one to another. These issues can happen as early as when the transaction takes place, or appear years later when a homeowner goes through a divorce, or dies. If you believe you may be in the midst of a conflict and are in need of a consult or legal representation, contact our office today to schedule an consultation with one of our highly knowledgable attorneys. Call us at 310-954-1877 or send us a message here.