What is Title?
Title” generally refers to ownership of a piece of property but includes all rights to a property by other parties.
What is a Deed?
A deed is a written document that evidences the sale (conveyance) of that ownership interest from seller (grantor) to buyer (grantee). Deeds are made official record at the county recorder’s office in the county in which the property is located – the “courthouse”. In addition to the buyers, sellers, sales price, and other required language, a deed also includes the legal description of the property being sold (conveyed).
What is the Legal Description?
This is not an address. An address is used for US mail, 911, maps, etc. On the other hand, a legal description uses very specific language to identify the property being sold. There are two types of legal descriptions:
- “Block & Lot” or “Plat”. Short and sweet. Example: Block 5, lot 72 of the Gleneagles Subdivision as recorded in Plat Cabinet 605, Slide 56 in the office of the Fayette County Clerk, Lexington, Kentucky. Commonly referred to as 123 Pretty Street, Lexington, KY.
- “Metes & Bounds” Usually for rural properties, this is a lengthy description in paragraph form that uses landmarks, distances, and directions of the compass to define the boundaries. Example: Parcel-1. Starting at a point marked by an iron pin, Southwest of the intersection of KY HWY 169 and Beckley Road, then commencing in a Southerly direction, 270 degrees, 27 minutes for 150 feet, then in a Westerly direction 185 degrees, 42 minutes for 1,075 feet to an iron pin, then…arriving at the point of origin.”
There are Several Types of Deeds Used for Different Circumstances
General Warranty Deed:
The most desirable. Used all across the U.S. A general warranty protects the buyer by guaranteeing the seller has full and clear title, is the sole property owner and has the right to sell the property. It also assures the seller does not know of any property issues that may arise. A real estate attorney typically prepares the general warranty deed.
Special or Limited Warranty Deed:
A special warranty deed is similar to a general warranty deed, but it only guarantees title for the time period of the seller’s ownership of the property. Buyer beware. This type of deed is typically used for commercial property purchases, not home purchases. A Limited Warranty Deed notes an issue with identifying who owns what rights/interests in the property before the current owner acquired the property.
- Special warranty deeds are common for commercial property, estates or foreclosures.
- These deeds guarantee a title is clear and free from the seller’s ownership period but excludes claims resulting from prior owners. Buyer beware! This type of deed can negatively impact the value and future marketability of this property.
- These deeds are best for sellers, while general warranty deeds offer more protections for buyers.
Quitclaim Deed:
Quit Claim deeds are typically used to remove a party from title. In some states, QCDs can be used to transfer a property from one legal entity to another without money changing hands. Popular examples of transferring with a quitclaim or other state-required deeds include:
- Parents transferring property ownership to children (aka Love & Affection Deeds)
- A spouse transferring property ownership to their spouse
- Individuals transferring property ownership to trusts or LLCs (aka Trustee Deeds)
- Transferring ownership from one LLC to another if the LLCs’ members are the same.
In some states, you can also use a quitclaim deed to change the legal name on a deed. Regardless, quitclaim deeds don’t provide the standard protections a buyer receives with a General Warranty Deed
You may hear quitclaim deeds referred to as “quick claim deeds.” Although transferring property with a quitclaim deed can be quick, the right way to say it is: quitclaim deed, not quick claim deed.
Who Else May Have an Interest (Rights) in Your Property?
Although title generally refers to an ownership interest in a property, title specifically refers to ALL interests in a property by all potential parties. Some of these interests can be:
- Rights to limited or specific use of your property by others due to easements they have been granted by you or by prior owners. For example – a utility easement gives a utility the right to access a defined part of your property to maintain its power/water lines.
- Rights held by lienholders and as defined in the liens and mortgages that are recorded.
- Spousal rights – In some states, a spouse can have an interest in their spouse’s property without even being named on the deed. How much of an interest depends on many variables that your real estate attorney can advise you.
How are all Interests in a Property Identified, and How Do I Get a Free & Clear Title?
The only way to find all the parties that have an interest in a property, so the title/escrow attorney can get all of them get paid off before you take title to a property…is for the title/escrow company to perform a title search. Even a perfectly executed title search cannot guarantee that all interests have been found. That’s right. In the U.S., the highest level of assurance that you own your property free & clear of all liens, is to get an attorney’s opinion stating that. There is no guarantee in the U.S. that someone, somewhere, will step up and claim to have an owhership or lien interest in your property.
Conclusion
Ensure you use a reputable title/escrow company & their attorney to prepare your deed and administer your purchase transaction. As a buyer, ensure you will be getting a General Warranty Deed. Strongly consider buying owner’s title Insurance, and, lastly, enjoy owning your property.
