When you buy a house for the first time, it can be exciting to dedicate all of your focus to moving in and unpacking in your new space. But, there are a few legal considerations to take care of before you can get the keys. One of the most important components of buying a house is obtaining the house deed, which will be signed as part of the closing process.
A house deed is a legal document that grants you ownership of the new property. Deeds are often confused with titles and other portions of the real estate transaction, but each component has its own purpose. Below we will outline exactly what a house deed is so that you can approach and finalize your first real estate purchase with confidence.
What Is A House Deed?
The deed to a house is a legal document that transfers ownership from the former owner, (the grantor), to a new owner (the grantee). House deeds are often called property deeds and are a crucial part of the closing process in any real estate transaction. They are typically transferred at the time of closing.
Deeds are the primary way that homebuyers can indicate true ownership and protect themselves in points of real estate dispute. The buyer and seller of a property should always fill out a house deed to verify the transfer of ownership is accurately completed during a transaction. The deed should then be notarized and filed with the county recorder’s office to maintain public record.
[ Want to create a roadmap to a financially secure retirement? Register for our FREE online real estate class to learn the powerful wealth building strategies real estate investing has to offer. ]
What Does a House Deed Look Like?
A house deed is a standard legal document and will generally look like a contract. Deeds contain specific information about the property in question, such as:
A statement indicating that the document is a deed
Description of the sold property
Grantor and the grantee information
Property seller signature
A notary stamp (when required by state law)
Note that the buyer is not required to sign the house deed — instead, buyers are presented with the final document after the transaction is complete.
House Deed vs. Title
A house deed and title are two commonly confused aspects of the homebuying process, and rightfully so. Both a house deed and a title pertain to ownership of the property, and the two terms are frequently used interchangeably or simultaneously. Despite these common mix-ups, a deed and a title refer to two slightly different pieces within a real estate transaction.
It is crucial to understand the differences between these concepts before you close on a house. Not only can this understanding better prepare you for the closing table, but it can also ensure you know how to legally protect yourself during the transaction. After all, one thing a house deed and title have in common is that they both directly impact the ownership of the property.
What is a Title?
A title is an owner’s legal right of ownership and the ability to sell. When a buyer legally purchases a home, the title will be transferred to their name. Businesses and other legal entities can also hold property titles.
Titles are also used to discuss ownership of other asset types, such as cars or boats. However, these comparisons can be slightly confusing. A car title often refers to the legal document you receive when purchasing a vehicle, naming you as the owner. In real estate, a title is more of a concept than a piece of paper.
Essentially a real estate title is a bundle of rights, granting someone ownership of a property. When a real estate transaction is finalized, the buyer will be granted the title but they will not go home with an extra piece of paper. Instead, they will become the title holder of the home for legal purposes.
Differences Between a Deed and Title
One way to think about the differences between a deed and title is to look directly at the words themselves. A deed is a document, while a title is just like any other official position (attorney, manager, dean, etc.). The title to a property means you are officially the owner; the deed proves that statement.
The frequency at which these two terms are used in a real estate transaction can make it difficult to keep things straight. But again, they differ in purpose and in practice. Here are a few key highlights to help as you attempt to commit these terms to memory:
Physical Document vs. Legal Term: The key difference, and perhaps the easiest to visualize, is that a deed is a physical document while a title is only a concept. When you close on a house, you will walk away with the deed (a physical document) in hand. The title comes into play before the actual close during a title search. The title search is a process of searching public records on the property to make sure that the seller is the property’s rightful owner. In other words, it ensures that they have legal title to the property and have the right to sell it to you. The search can also reveal whether or not there are any liens or claims on the property. If there are, you will likely want to walk away from the deal as the title is not clear.
Intended Purpose: Both a deed and title are crucial when determining home ownership. The deed will prove that the seller is the actual titleholder during the real estate transaction. The title is the legal right to modify the property or transfer ownership to another party. For example, the title gives you the right to one day sell the home.
Legal Process: These two elements are utilized at different times during a real estate transaction. The deed is drawn up by a real estate attorney before the closing meeting for the seller and buyer to sign. The title is researched before closing to ensure no legal or financial problems are associated with the property. The title needs to be clearly stated and researched to guarantee that no legal issues will arise after the transaction.
How Do House Deed Transfers Work?
House deed transfers are typically conducted at the time of closing and will typically be facilitated by a real estate attorney. The new deed is then filed with the county recorder’s office; this responsibility will be delegated at the time of closing. In some cases, your lender or agent will file the new deed, or your attorney may handle the responsibility. If you ever need to change the name on the deed, like after getting married or divorced, you can file a request with the county.
House deeds can also be transferred between family members following a slightly different process. This may become necessary when switching ownership between relatives or after a family member has passed away. Different types of deeds can be used in these cases, though a quitclaim deed is the most common. When signing a quitclaim deed, you essentially forfeit your ownership of the property to transfer it to another family member. This transfer is then notarized and recorded with the county recorder’s office.
Transferring a house deed can sound complicated, but in traditional real estate transactions it will happen within the closing process. First-time homebuyers should understand the importance of a title search and what a deed includes. These distinctions will help set you up for your new purchase and ensure there are no legal challenges with ownership.
There are numerous legal components to the home buying process, all of which can be intimidating for first-time buyers. The best advice is to review what you can and work with a trusted agent who will guide you through the rest. There are numerous steps in a typical real estate transaction, and they all end with you signing the final house deed and moving into your new property.
Want to learn how to take advantage of the current opportunities in the real estate market?
Whether you’re brand new to real estate or have closed a few deals, our new online real estate class covers everything you need to know to help you get started. Expert investor Than Merrill explains the best real estate strategies for today's real estate market to help get you on the path towards a better financial future.
Register for our FREE 1-Day Real Estate Webinar and get started educating yourself on how to invest in today’s real estate market!