There are big differences between a Deed vs Title. Many people often assume these two terms mean the same thing. However, this is not the case. Deed and Title are two separate, distinct legal concepts.
If you plan to transfer or sell real estate property, it is a good idea to familiarize yourself with the meaning of these terms.
Deed vs Title
Simply stated, a Deed is a physical legal document that shows title ownership. Title, on the other hand, is a right of ownership, rather than a physical legal document.
For example, if you purchased a house, you own title to the house and should have a Deed that shows your title to the house.
Your Deed shows your title to the house.
Good to know: Title is simply the legal right of ownership of something. Anything that is privately owned has a title. In the case of real estate property, your title is your right to ownership of your house. Privately owned real, personal, tangible or intangible items all have title.
Note: Just as anything privately owned has title, public items, on the other hand, DO NOT have title. Examples of public items might be wind, sun, moon and so on.
Also, as it relates to private real estate, title gives you the exclusive right to legally use your property as you wish. Title also gives you the right to transfer your interest in the property.
Good to know: A property deed can only transfer whatever interest owned by the party that signs the deed. So, whether you own full title or partial title to the property will determine the percent of the property you may transfer.
If you own 50% of the title, you can use a deed to transfer only your 50% of the property. You do not need permission from the other owners to transfer your 50% interest in the title, unless you previously agreed otherwise.
Another example is when three property owners each own a 1/3rd of the title. In that case, one owner may use a deed to transfer 1/3rd of the title. The other owners will continue to own their 2/3rd interest in the title until they choose to transfer their shares.
There are exceptions, though, depending on the deed and any agreement made between the owners.
More about the Deed
The Deed is the document that transfers title. You use a Deed as a means to convey or transfer the ownership rights to your property to or from another person or entity. The Deed must be a physical legal document. The Texas Property Code specifies the requirements for a legal conveyance of title.
Good to know: Because a Deed must be signed by the person transferring the property, the property owner must be alive. Deeds are used to transfer title between living people. However, if the person that signed the Deed dies after he or she signed the document, it is still valid as evidence of title for the new owner.
Note: If an owner is alive but not mentally competent, he or she cannot transfer title. Only a person legally authorized to sign for the owner can sign the Deed to transfer title. The person signing a Deed for a mentally incompetent owner will need a Durable Power of Attorney or a court order authorizing the transfer of the property.
Durable Powers of Attorney are VERY IMPORTANT. Everyone should have one. Be sure to sign one today.
A Deed can be used to add a person to the title.
A Deed can be used to remove a name from the title.
Once you sign the Deed in front of a notary, the title to the house is transferred to the person you named in the Deed as the new owner. At that point, you no longer own the title.
Good to know: It is important to file the signed Deed at the county clerk’s office promptly. The document may only be filed in the county where the property is located. Filing the Deed in the county clerk’s office makes it a public record. Most counties charge a recording fee of between approximately $15 and $40.
Note: Make sure the document is properly prepared, signed and notarized. Otherwise, it may be considered void. Only documents that have been properly notarized will be accepted by the county clerk’s office for filing.
A Deed is Evidence of Title
Also, once you sign the Deed, it becomes the new owner’s evidence of title. This is the written proof that you have transferred the title to the new owner. As a result of your signing the Deed, the title has transferred to the new owner. You no longer own the title.
Note: In addition to a Deed, other examples of evidence of title may include a court order, a divorce decree, or a probate order in an estate proceeding.
As it pertains to real estate, legally speaking, a Deed “evidences” title or ownership to the property.
Although the specific requirements vary by state, generally, a Deed should state:
- The name of the person or entity who sold or transferred the property.
- The name and address of the person or entity who purchased the property or received the property as a transfer.
- The legal description of the property. This is often the address for the property.
Provisions
Deeds can contain additional provisions affecting the transfer of the property. Common provisions may specify the conditions, warranties or reservations that go along with the property Deed transfer.
Vendor’s Lien
One of the most common provisions in a Deed is a “vendor’s lien”. This occurs when the property is being financed. The seller or the mortgage company may want a lien on the property to secure the promise to pay the borrowed money used to purchase the property.
This lien is commonly known as a Warranty Deed with Vendor’s Lien or a Seller’s Lien.
Life Estate
Another common provision in a Deed is a “Life Estate”. A Life Estate allows the person transferring the property the right to continue to live in the property until he or she dies. You might use this as a part of an estate plan. To create a Life Estate, the owner transfers title to the new owner and reserves a Life Estate.
Mineral Rights
Yet another example of a common provision is a reservation of the Mineral Rights to the property. The owner transfers title to the new owner and reserves the Mineral Rights in the property.
Life Estate and Mineral Rights provisions are referred to as Reservations from title.
More about Title
Common examples of title include:
- Your car title. This shows that you own the car. It is your evidence of title or ownership to the car. If you financed the purchase of your car, there may be a lien on the title.
- A receipt from a store. It shows that you own the items purchased at a store. The receipt is your evidence of title or ownership of the items you purchased.
- A stock certificate shows that you own shares in a corporation. The stock certificate is your evidence of title or ownership of the stocks in the corporation.
- A property Deed shows you own a house, building or land. Your Deed is your evidence of title or ownership of your real estate property. It is the document you show when you need proof you own the real property.
Title for Real Estate
Title for real estate may either be “clear title” or “encumbered title”. Clear title generally means that the title is free of any defects, such as liens, judgments, or bankruptcies. If the defects are not cleared before transferring title to a property, the new owner will receive title that is not clear title.
Most liens will stay on the title until they are paid or released. Some liens expire. Other liens never expire. Most liens can only be removed or cleared from a title by a written Release of Lien signed by the owner of the lien.
Examples of encumbrances on title may be:
- Unpaid taxes
- Bankruptcy filings
- Boundary disputes or encroachments
- Child support liens
- Contractor liens
- An error in a previous property title transfer
A property Deed can act as a guarantee to the buyer that the seller actually owns the property and that the property is free of any encumbrances.
Good to know: Transferring title to a property DOES NOT remove a lien on the property. Most liens will stay on the property.
Transfer Title with a Will
Title to property may also be transferred by a probated Will that is properly prepared and signed.
A Will can transfer title to anything. This might include land, a house, a boat, or any other property, real, tangible or intangible.
Good to know: Be aware that after the owner dies, the Will needs to be filed with a probate court within 4 years. The probate court will verify that the Will was properly prepared, signed and that it is in fact the owner’s Last Will and Testament.
If the probate court agrees that the Will is valid, the probate court will issue Letters Testamentary to the executor or executrix named in the Will.
That person will then need to sign a Deed to transfer title to the property. This Deed is referred to as an Executor’s Deed. It is used to transfer the deceased owner’s title to the new owner named in the Will.
A probate court may also probate the Will as a Muniment of Title. A Muniment of title means the Will is evidence the person named in the Will owns the title to the property.
Can a Minor Own Real Estate?
A person under 18 years of age is a minor. A minor can own real estate, but he or she cannot transfer title.
Only a person authorized by a court order can transfer property owned by a minor.
Good to know: A parent cannot transfer property owned by a minor child unless a court authorizes the transfer of the property owned by the minor. The parent is required to file an Application for Sale of Minor’s Interest in Property with a probate. If the court allows the parent to sell the property, the court will hold the proceeds of the sale of the property until the minor turns 18 years of age.
It is not recommended to transfer title to a minor. Use a Trust for this purpose instead if possible.
