One of the many responsibilities associated with owning a house is understanding all of the different real estate and legal jargon that comes with it. Because these are terms that aren’t often used elsewhere, it’s easy to forget certain term definitions or get them mixed up. A prime example of this is the two terms “deed” and “title.” You might be thinking to yourself, “Don’t they mean the same thing?” The answer is, not quite. There are important distinctions between deed vs. title. If you’re planning to buy, sell, or bequest property through your estate plan, then you’ll want to understand the difference. Keep reading to find out.
What is a house deed?
A house deed is a legal written document. It’s used to transfer property ownership and thus documents who owns a particular property. When someone decides to sell or gift a house, they must sign a deed (along with the buyer or recipient) to make the transfer happen such that the new owner receives the ownership rights to the house.
Although this may seem simple and straightforward, it turns out that a deed is integral when it comes to settling legal disputes. The question of homeownership can become muddied, especially in cases where a house is handed down from generation to generation, or other scenarios in which ownership can get contested. These disputes can get settled by simply checking the name on the deed. This also points out how important it is to correctly file your deed and make sure it is free of errors.
Our guide “What is a Deed to a House” expands this definition further.
What is a house title?
A house title is a representation of the legal rights held by the owner of a property. This includes ownership rights and rights of use for a specific property. A house title is not a document. Rather, it’s a legal concept that establishes a property owner’s set of rights.
This “bundle of rights” represents all rights and benefits that come with being a property owner. Here are several rights included in property ownership:
Right of Possession: the right to possess the property
Right of Control: the right to use the property as you’d like
Right of Enjoyment: similarly, the right to enjoy the property however you wish
Right of Disposition: gives you the full right to sell, rent, or transfer property ownership to another property
Right of Exclusion: the right to limit who can enter the property
Note that some of the rights can be adjusted or limited by the law, liens, easements, or Homeowner Association (HOA) rules. However, these are conditions that you typically agree to in advance, or are in rare scenarios that you have the power to avoid.
For example, let’s discuss the Right of Exclusion. This right legally allows you to limit who you permit to enter your property. Can you think of a time when you might not have this right? If a police officer obtains a legal search warrant, then they have the authority to override your right. Note that this type of scenario is avoidable and is an extreme case.
Or, let’s say you want to turn your front yard into a miniature golf course. Normally, the Rights of Control and Enjoyment would allow you to do what you wish with your property. However, if you are a part of a Homeowners Association (HOA), the rules may not allow this. Again, these are rights that you would typically enjoy unless you permit yourself to sign a contract that overrides a portion of those rights.
House title is important, especially when it comes to real estate transactions. When you see a person selling a house, you might assume that they might have the right to sell it. However, this isn’t always the case. Just because a person thinks they own the house, and are living in it, doesn’t necessarily mean that they hold title to the house and have the legal right to sell it.
Let’s say you move in with your grandparents and they eventually pass away. They verbally told you that the house would be yours, but they did not take the legal steps to make this reality. The title was not transferred to you, and thus you are not on the deed. At this time, you do not have the legal authority to sell the home. The probate court might then pass the home (using a court-ordered deed) to someone other than you using the state’s default probate laws.
Although this is a perfectly hypothetical scenario, these types of situations arise more often than you might think and help highlight the importance of determining title.
House deed vs. title - what’s the difference?
So far, we’ve helped define what a house deed is, as well as what it means to hold title. Here, it may be confusing to understand the difference between deed and title. They are both legal terms that describe who owns a house.
The key difference between a house deed vs title is that a house deed is a legal written document, while a title is a legal concept. Property title describes the set of rights that come with property ownership, such as the right to use a property how you please, as well as the right to sell it.
In contrast, a house deed is a document that is used to transfer property title and thus proves who holds the title to a house. A house deed is the physical legal proof that allows a person to exercise their title rights.
Make sure these documents are a part of your estate plan
If you are planning to buy, sell, or bequeath property any time in the future, it’s time to start learning some important real estate vocabulary.
A great place to start is by understanding the difference between a house deed vs. title. These two terms both describe property ownership, so it’s easy to get them mixed up. It’s also easy to assume that they mean the same thing. You’ll be sure to impress your buyer, seller, real estate agent, and the like if you can define the two terms. Bonus points if you can eloquently point out the distinctions between the two!
In summary, a house deed is the legal document that proves who owns a house. It’s also the instrument used to transfer property ownership from one party to another. Property title is a concept representing a homeowner’s “bundle of rights,” such as the right to sell the property, rent it out, or use it as your vacation home. If you have the deed to a house and are listed as the owner, then that also means that you hold title to the property and are legally empowered to exercise your homeowner rights.
House deeds and real estate ownership play an important role in your estate plan. One major aspect of estate planning includes accounting for all of the assets and property in your name, and leaving instructions for how they should be distributed amongst your loved ones when you are gone one day. A part of your estate planning strategy should include what type of deed you plan to implement to transfer property to your loved one.
Should you like any assistance with the process of incorporating real estate into your estate plan, Trust & Will is here to help! Whether you’d like to set up or update your Will, or tackle setting up a Trust to further protect your property, we are here for you! You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning options today!
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