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Real Estate Titles and Deeds: What’s the Difference?

by Kevin Perk on December 2, 2013 · 17 comments

  
The Difference Between a Title and a Deed

Sometimes, we “more experienced” investors throw jargon around and assume everyone knows what we are talking about. 

That however is often not the case, especially when a newbie is listening.  From time to time therefore I like to get down to basics to make sure everyone is one the same page.  This time I want to quickly talk about a couple of legal terms real estate investors throw around all the time, titles and deeds.

What is a Title?

Title is very important in real estate.  It is much more than what is found on a book cover.  Title defines the formal rights of ownership, ownership of things like real estate or cars.  By having a title to certain lands or property, you have certain rights to those lands or property.  This is why when you purchase a property you often hear the term, “taking title” to the property.  One of these rights that you usually purchase is possession or use of the property.  However this right of possession does not always have to be included.

Titles can convey different rights to different parties.  For example, a title owner can sell mineral and oil rights, but retain the rights to use the surface.  As another example, a farmer may wish to preserve the open nature of his farm forever.  Thus he may choose to sell the development rights (the rights to develop a shopping center or subdivision) to a land trust whose stated purpose is to preserve the property as open space.  Or you can sell and easement, which only grants access rights to a specific part of a property.

It is important to remember that just because you get a title to a property, it may not mean you get all the rights to that particular piece of property.  You will only get the rights that are conveyed to you by the title in a deed.  States and locales will differ here, so be sure you ask someone competent in your area as you may not always be buying exactly what you think.

What is a Deed?

Titles are transferred by a deed.  A deed is simply a written statement conveying the title or rights to a property.  It is signed by the person selling or conveying the property rights, often called the grantor.  The person purchasing or taking possession of the property rights is often called the grantee.  Deeds come in many types and forms.  There are warranty deeds, trust deeds, special warranty deeds, trustee deeds, tax deeds, etc.  All of which are material for some future post.

Titles or ownership rights are therefore described in various deeds.  This is why deeds are publicly recorded in your local courthouse.  Everyone needs to know who owns what and who has the rights to what.  Who owns the rights to fence that location in?  Who owns the rights to the oil beneath the ground?  Where do the rights of the public road begin and end?

Titles can be held by individuals or they can be held jointly by two or more persons such as a husband and wife.  Titles can also be held by corporations, partnerships or even trusts.

This is a very basic and quick overview of titles and deeds.  More on these topics will come in the future.  If you have specific questions, consult a competent real estate attorney in your area.

Photo: Universal Pops

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{ 17 comments… read them below or add one }

David Krulac December 2, 2013 at 6:07 am

Kevin,

Good basic info.

Property can be transferred without a deed, so a deed is not the only way that property can be transferred. For example real property can be transferred to a new owner by a will or even the language in a prior deed.

“Joint title With Rights Of Survivorship” and “Tenants By the Entireity” both transfer ownership upon death without a new Deed being created. Life Estates and Remainderman interests are also transferred without the necessity of a new deed upon death or another specific event.

And as far as a requirement to Record a Deed, I’m not familiar with any state that a “requirement” that deeds be recorded. In my experience I often see unrecorded deeds and on one property there was SIX unrecorded deeds in a row covering many decades of ownership not visible for the public in the Recorder of Deeds office.

Best regards,
David Krulac

Reply

Kevin Perk December 2, 2013 at 11:00 pm

David,

Thanks for the insights. You are absolutely correct. I probably should have said “Titles are often transferred by deed.” This would have been much more accurate because wills, etc can transfer a title.

I have never heard of not recording a deed, but I guess you are right. Do you really have to record it? I am going to ask my local attorney and I will get back to you. Perhaps I have learned something today. Thanks for reading and sharing.

BTW, were you able to get the deal with six unrecorded deeds?

Kevin

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John Van Fossen December 2, 2013 at 1:22 pm

Thanks for the quick overview. I’m just getting started in real estate and was looking for a straight to the point article like this. Looking forward to future no BS descriptions of the different deed/title types.

Reply

Kevin Perk December 2, 2013 at 11:01 pm

Thanks John,

I will write similar posts in the future.

Kevin

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Adrian December 2, 2013 at 1:36 pm

Good basic description. Title is sometimes referred to as a “bundle of sticks” because there are many rights that go with land ownership, and they can be transferred individually – you can transfer one right or all.

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Kevin Perk December 2, 2013 at 11:02 pm

Adrian,

Nice analogy.

I appreciate you reading and commenting,

Kevin

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Jessica Sala-Bonin December 2, 2013 at 2:09 pm

Great post for a beginner like me looking to start out!

Reply

Kevin Perk December 2, 2013 at 11:02 pm

Thanks Jessica!

Kevin

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Dennis Lanni December 2, 2013 at 10:09 pm

Great post. I am amazed at how many seasoned investors do know know title. Knowledge is power. I am looking forward to part 2 & 3.

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Kevin Perk December 2, 2013 at 11:03 pm

Thanks Dennis,

Education is one of the keys to this business.

I appreciate you reading and commenting,

Kevin

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David Krulac December 3, 2013 at 6:34 am

Kevin Perk, Thanks for the compliment.

Deeds are the overwhelming vehicle for transferring property, no doubt, but I just wanted to mention some other vehicles.

When you start actually looking at titles, there are lots of odd ball things that go on. The unrecorded deeds situation I think was the result of old timers thinking that by not recording the deeds, they saved the costs of recording (which even with the extra fees added is not that much) and that they saved the cost of transfer taxes. I think that they also thought that they saved some money in real estate taxes, because the assessors didn’t have visibility of sale prices.

As far as the six unrecorded deeds in a row, it was a very difficult title issue and the non-recording caused confusion and title distress for about 100 years. i was able to resolve all those issues, but it was not easy or quick, but highly profitable.

Reply

Kevin Perk December 3, 2013 at 10:38 pm

David,

Your last sentence says it all about why we investors should learn this stuff. Because it can be highly profitable. If you can play a detective, find these things and then solve someones problem, you can get a nice payday for your efforts. Thanks again and I will be in touch on the non-recording issue after I talk with a few folks.

Kevin

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Mehran Kamari December 3, 2013 at 12:30 pm

Thanks Kevin, you’re a sharp guy and I like this style of post. I look forward to future ones.

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Kevin Perk December 3, 2013 at 10:39 pm

Thank you Mehran,

I appreciate your kind words. Happy to write more in the future.

Thanks for reading,

Kevin

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Dennis Lanni December 3, 2013 at 11:06 pm

Kevin-
Unrecorded deeds typically would require a quit title action (a lawsuit) mainly because the “court of title insurance” won’t insure the title without a court order. David could jump up & down until he is blue in face showing everyone on the planet that these transfers are legitimate & it won’t matter because the property will most likely be uninsurable. Delivery & use are key to that type of situation when you have unrecorded deeds.

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Kevin Perk December 5, 2013 at 11:17 pm

Dennis,

Thanks for the insight. Sounds sort of like a tax deed. The government insists the transfer was properly done yet it is very difficult to get title insurance, which many times will kill a deal.

Thanks for reading and commenting,

Kevin

Reply

Cuong Le December 6, 2013 at 1:24 pm

Thanks Kevin for the post. I like this because it’s simple and too the point. The terminology can be confusing some time but your post cleared it up.

As you mentioned, having the grantor signing the deed will make the deed valid. The deed doesn’t need to be signed by the grantee, dated or recorded in order for it to be valid. It maybe different in other states though.

Drilling down deeper to different types of deed would be awesome for future posts. Basic knowledge of which one provides certain level of title guarantees and etc would be great. Keep it up!

Reply

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