What Does Title Mean in Real Estate?

By: ROS Team

You will come across many real estate terms when buying property, and ‘title’ is one of them. In real estate, a house’s title refers to property ownership. Having a defective title may cause problems in establishing property ownership, so it is important to understand what a house title is.

1- Title in Real Estate
2- Title vs Deed
3- Title Types
4- FAQs

What is Title in Real Estate?

The title is a legal way of listing the ownership of a property. It is used to show ownership rights of both personal property (all property except real estate that can be subject to ownership) and real property (land or anything attached to the land).

Note: There can be multiple holders for a property title. An example of this would be a married couple.

Difference between a Title and a Deed

For a newbie, real estate terms can be unique and complicated. And for many potential buyers, a common area of confusion is understanding the difference between a title and a deed. Both terms are closely connected, but they have different meanings in real estate.

As discussed earlier, a title is the real estate term that shows property ownership. A deed, on the other hand, is a legal document that transfers the property’s ownership (title) to another person. The person who transfers the title is called the grantor and the person to whom the title is transferred is called the grantee.

In general, the title seems like a document, but it isn’t. You can think of the title as a bundle of rights to a property. On the contrary, a deed is a piece of paper that transfers title from grantor to grantee.

Title Types

There are five types of real estate titles:

1) Joint Tenancy
2) Tenancy in Common
3) Community Property
4) Sole Ownership
5) Tenants by Entirety

Joint Tenancy

There can be multiple holders for a property’s title; when such a scenario exists, it’s called joint tenancy. With this title type, ownership is equally divided among the interested individuals. If one of the parties dies, the title is transferred to the surviving title holder through a legal document called the right of survivorship. It should be noted that the property responsibility in a joint tenancy is shared among all parties, and any financial loss related to the property belongs to everyone.

Tenancy in Common

With tenancy in the common title, two or more individuals jointly hold a real estate title. They may choose to pass the ownership down to anyone. In case of death, ownership is transferred to the surviving owner’s heir(s).

Community Property

In the case of community property, real estate is equally divided between husband and wife, regardless of how the property is titled. In the event of divorce or death, the surviving partner would get all the community property.

Bear in mind that only the following Nine US States are Community Property States:

1- Arizona
2- California
3- Idaho
4- Louisiana
5- Nevada
6- New Mexico
7- Texas
8- Washington
9- Wisconsin

Sole Ownership

As the name suggests, sole ownership is when the property is titled to only one person. The main advantage of sole ownership is that you don’t need other parties to authorize the transaction. But in case of death, the transfer of assets becomes problematic and may need legal documentation like a will.

Tenancy by Entirety

Tenancy by the entirety is only for married couples. This form of ownership assumes a couple as one person and transfers ownership to them as such. It also states that if one partner passes away, the entire ownership transfers to the surviving spouse. However, in the event of separation, tenancy by entirety converts to a tenancy in common.

FAQs About Property Title

How Can You Get a Title?

Whether you bought the property or inherited it, it’s important to have a clear title over the property. You can then get a title by filing an application with the local development authority.

What Happens to the Title When You Sell the Property?

When you sell the property, the title transfers to the buyer; records will then indicate that you no longer have any claim over the property and the title you now hold is invalid.

Can’t I Just Buy a Property Without a Title?

The answer is a big NO. Property transfer involves a lot of risks, therefore the establishment of a clear title is essential.

Can a Title Have Defects?

Yes, definitely. Your title may have defects and it may be due to one or more of the following reasons: there’s a mortgage on the property; issues with past ownership, unpaid taxes, boundary encroachments, and/or bankruptcy filings. The best you can do to avoid title defects is to do a title search, which will provide a list of all the individuals who have a vested interest in the property. You can do a title search on your local property registration website.

Other precautionary measures you can take include:

Add a clause in your purchase agreement that states that if the property doesn’t have a clear title you can cancel the agreement without penalty.
Get title insurance if any issue arises after the purchase.

What If You Lose the Property Title?

If you’ve misplaced your title, don’t worry–you can get another copy of the title from the county courthouse where your property is located.

Read Also: What is a Property Title Search

Conclusion:

As a first-time property buyer, you need to know about property titles. In case there’s any type of title defect, don’t panic as title issues can be resolved relatively quickly. Also remember that having a property title means you have rights to the possession, control, exclusion, and disposition of that property.