Title vs. Deed
Deed vs. Title: what's the difference?
When you are about to purchase or refinance your house, understanding the difference between the deed vs the title is an important starting point. Often these words are confusing and interchangeable. It is important to understand the difference because you might have to explain to the loan officer or the title company who is going to be on the title and how the deed will be filed.
The deed is the actual legal instrument used to confirm or convey the ownership of real estate. Whereas the title is not a legal document, but rather a concept. It is the legal way of saying you have ownership in a real estate property.
Looking to take title or file the deed without a lender?
If you are looking to purchase real estate with cash or without a mortgage you will have to find a title company. Your real estate agent or someone from the title company will guide you through the documents that need to be completed.
There are many different types of deeds.(hyperlink to blog about types of deeds.) Each state has different laws around how properties are conveyed and owned.
What is a title company and what do they do?
A title company is the company that reviews the title. They can also issue insurance policies, facilitate closings, and file and record paperwork. Title insurance companies are regulated by the state’s Department of Insurance.
In a real estate transaction who chooses title?
In most real estate purchase deals, the buyer will have the first choice in what title company they want to use. This is because a seller can never force or make their deal contingent upon using their own title company. That would NOT make it compliant with R.E.S.P.A. regulations.
But in all transactions, mostly everything can be negotiated between the buyer and seller.
Despite what negotiations take place, a title company does not represent either party. The title company represents the “Contract of Sale”. They are a neutral 3rd party that does work for both the buyer and seller listed in the Purchase Contract. The title company begins their work after the purchase agreement has been executed.
Who says the buyer has the right to pick the title company?
The CFPB (Consumer Finance Protection Bureau) states, “Sellers that hold legal title to the property being sold are prohibited from requiring borrowers, either directly or indirectly, as a condition to selling the property, to use a particular title company.” (RESPA, Real Estate Procedures Act)
Understanding the title shouldn’t be hard. The lender, realtor, and the title company have the fiduciary responsibility to make the right recommendations for the buyers best interests. That responsibility will often fall on the realtor during a purchase or the lender during a refinance. The title company or the lender will be able to guide you on how to take title so they can properly file the deed.