What's the Difference Between a Deed and a Title?
According to the National Association of Realtors, 34% of homes purchased last year were bought by first-time homebuyers.
Buying your first home can be an eye-opening experience. When you go from being a renter in someone else’s property to becoming an owner of your own home, you have to become more aware of things you’ve probably never thought much about before: appliance repair, homeowner’s insurance, property taxes—it’s a seemingly endless amount of topics that you’re expected to understand almost overnight.
Becoming more familiar with the ins and outs of homeownership can help you protect yourself, your family members, your property, and the equity you build over time.
In this article, we’ll explain the difference between a deed and a title and help you understand why knowing the difference between the two matters.
What is a Property Deed?
There are three distinct types of property deeds: a general warranty deed, a special warranty deed, and a quitclaim deed.
A general warranty deed is usually prepared by a mortgage company and confirms to the buyer that the seller has title to the property and full rights to sell.
A special warranty deed is usually used for commercial real estate purchases. It offers a similar guarantee to the buyer as a general warranty, but only during the period of time when the seller had ownership of the property, and not before. This type of deed ensures that the seller is not liable for any liens, issues, or claims that may have existed before they owned the property.
A quitclaim deed is most commonly used when a property is being transferred without a traditional, like when a parent transfers their home to a child or when a person transfers their home to a spouse. This type of deed is relatively quick and simple. The downside is that it does not offer the same amount of protection that general warranty deeds offer to the person the property is being transferred to.
What is a Property Title?
A title refers to a legal right to own and sell a property. Rocket Mortgage describes home titles in this way:
“A house title represents all of the legal rights surrounding the ownership and use of a residential property[...]This bundle of rights encompasses all of the rights that come with being a property owner. It means you have the right to: possess the property (Right of Possession); use (Right of Control) and enjoy (Right Of Enjoyment) it however you wish; sell, rent, or transfer ownership (Right Of Disposition); limit who can enter the property (Right of Exclusion).”
When you go through the process of buying a home, one step you’ll be required to complete is to obtain the title. As soon as you hold the title on a property, you have legal ownership of it and can decide what happens to it.
As a new homeowner, you may remember that you had to purchase title insurance as part of the process to buy your home. Title insurance protects you and your lender from any hidden liens, conflicting ownership claims, or any other issues that the seller failed to disclose when attempting to sell the home to you.
Why Does Knowing the Difference Matter?
Knowing the difference between these two terms is an important part of homeownership.
When you rent an apartment, you don’t have to worry about anything related to ownership, but when you own a home, it’s your responsibility to understand how ownership and the transfer of ownership works.
This becomes especially important if you decide to sell your home at any time in the future.
It’s also important because understanding how deeds and titles work can protect you from criminals who try to transfer titles from homeowners to steal and profit from their home equity.
According to the FBI, title theft is one of the fastest-growing white-collar crimes in America, accounting for twenty percent of all fraud.
Title theft, also known as title fraud, occurs when someone fraudulently changes the name on your title from you to them, effectively stealing your home. Once they have access to your home title, a criminal can take out loans using your home as collateral, pocket the money, and disappear.
The main reason why this type of crime is popular among white-collar criminals is due to the fact that no one is actively monitoring or protecting your home title on a regular basis.
How to Protect Your Home Equity
The idea that you could unknowingly become a victim of home title fraud is scary. It’s a crime that can have a real emotional and financial impact on your life, now and into the future.
One good way to protect your home equity is to be more proactive when it comes to preventing home title fraud.
You can be more proactive by following these 5 tips:
Tip #1: Closely monitor your credit report. Look for any discrepancies or unexplained changes that could point to fraudulent activity.
Tip #2: Read through all your mail. Make sure you are still receiving mail from your current lenders and look for mail from lenders you don’t recognize.
Tip #3: Spend time monitoring your home title documents. Access county public records and look for any changes that have been made without your knowledge.
Tip #4: Physically visit your properties if you are not living in them full-time or if they are not your primary residence. Make sure no one unexpected has taken up residence in your home, condo, or townhouse.
Tip #5: Sign up for home title protection services. Use a service like Home Title Lock to automatically monitor changes to your home title and get real-time updates in the event that changes have been made.
When it comes to protecting your home, your assets, and your family, education and proactiveness can make all the difference. Don’t leave it up to someone else. Learn how homeownership works, even after you buy your first home. Do what you can to constantly keep your equity out of the wallets of criminals, which includes monitoring your title on your own or with a trusted service like Home Title Lock.
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