| Deed vs. Title: Terms Home Buyers Need to Know |
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 Most people use the terms Deed and Title interchangeably, but there is a significant difference between the two— a distinction that's important to understand when you're ready to purchase a home. So let's look at what distinguishes a deed from title.
What’s the difference?
A deed is a legal document used to confirm or convey the ownership rights to real property. It must be a physical document signed by the seller/ grantor.
Title, however, is a legal way of saying you have ownership of real property. Title is not a document, but a concept that says you have the rights to that property.
So when you buy a property, you will receive the deed, a document that proves you own it. That deed is an official document that shows that title to the real property has been conveyed to you as the grantee.
How to get the deed and take title of a property?
To get the deed and "take title," or legally own the property, your title company will perform a title search. This ensures that the seller has the legal right to transfer ownership of the property to you, and that there are no liens against it. If everything is clear, then at closing the seller will transfer the title to you, and you become the legal owner of the property.
In California, the title company will ensure the deed is recorded at the county recorder’s office or courthouse, depending on where you live. You'll generally get a notification a few weeks after closing escrow, that your deed has been recorded. At that point, you have the deed and title to the real estate and the property is all yours.
What is title insurance?
Even with all of the due diligence a title company does before closing, there can be rare instances when title problems can pop up later (e.g., missed liens and other legal issues that can be very costly to resolve). To protect against any financial loss, two types of title insurance exist: owner's title insurance and lender's title insurance.
Unlike other types of insurance that protect the policyholder from events that may happen in the future, an owner’s title policy protects the buyer from events that have happened in the past that may jeopardize your financial interest, such as title defects, fraud, and unpaid liens against the property, or claims that someone else is the real, legal property owner.
On the other hand, when you secure a mortgage, your lender or bank will require that you purchase lender's title insurance to protect the lender in case any title problems arise. Lender's title insurance protects the lender's interest in your property until the loan has been paid off.
Adapted from an article by Audrey Ference on Realtor.com.
This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice. The material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy.
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