If you’re not in the real estate industry, it’s easy to get confused by the lingo. For new homebuyers, it might feel like you’re learning a new language!
As a title transfer company, we often see our clients get mixed up by two terms in particular – home deed vs. title. Let’s make sure you understand the difference before you buy a new home.
What is a home title?
Most people think of the home title as a piece of paper. But it’s actually a set of rights – often referred to as a “bundle of rights.” It includes:
- The right of possession – The property is legally yours.
- The right of control – You can use/modify the property however you’d like (within the law).
- The right of exclusion – You can decide who can come on your property.
- The right of enjoyment – You can engage in activities on the property however you’d like (within the law).
- The right of disposition – You can sell it (transfer the title to someone else).
During the closing, a title company performs a property title search to make sure the seller has legal ownership of the property. They’ll look for any liens or claims against it. Once the title comes back clear, you’ll be able to “take title,” becoming the new owner.
What is a home deed?
The home deed is the legal document transferring the title’s bundle of rights. The deed includes the name and signatures of the buyers (grantees) and sellers (grantors). During the closing, the title transfer will occur. You’ll leave with the signed deed in hand.
For most traditional home purchases, you’ll receive what’s called a general warranty deed. This certifies that sellers aren’t aware of any potential problems with their deed. Not only when they owned it, but for the life of the property. You won’t have to worry about third parties insisting they own your new home. And even if that does happen, the sellers will defend the title.
Importance of Title Insurance
While the title company usually catches issues during the title search, title insurance provides an extra layer of security. You can protect yourself against costly problems, even if they arise after closing. The most common claims are back taxes, liens, and conflicting wills. With title insurance, you won’t have to pay for litigation to resolve the dispute.
In Pennsylvania, you must purchase both owner’s title insurance as well as lender’s title insurance when you buy a home with a mortgage. If you pay for the home in cash, title insurance is optional but highly recommended.
Get an estimate on title insurance with the Trident Land
Check out the Trident Title rate calculator to get a title insurance quote. More questions? Contact a professional at Trident Land Transfer Company. As part of the BHHS Fox & Roach family of companies, we’re here to provide everything a homebuyer needs.