Closing day marks a huge milestone in the home buying or selling journey—it’s when a property officially changes hands. But behind the scenes, a lot is happening to ensure the legal transfer of ownership goes smoothly. Two important components of this process are deeds and titles.
Here’s what every buyer and seller should know:
What is a Deed?
A deed is the legal document that officially transfers ownership of a property from the seller to the buyer. At a minimum, it includes the names of both parties and the seller’s signature, though many deeds also require the buyer’s signature and a legal description of the property. Once signed, the deed is typically filed with the local government, becoming part of the public record.
What is a Title?
A title isn’t a document—it’s the legal concept of ownership rights to a property. The deed transfers these rights to the new owner. When a title changes hands, it often triggers a one-time transfer tax (separate from annual property taxes). Whether the buyer or seller pays this tax depends on local laws.
Are There Different Types of Deeds?
Yes, and the type of deed can affect what rights are transferred. Most home sales use general-warranty deeds, which offer the highest level of protection for buyers. This type guarantees that the seller legally owns the property and has the right to sell it—offering peace of mind that you’re getting full ownership.
Your REALTOR® can help you understand the type of deed involved in your transaction and what rights come with it.
What is a Title Search?
Before closing, a title search is conducted to ensure the seller has a clear and legal right to sell the home. It also checks for any “clouds” on the title, like liens—which are legal claims from creditors due to unpaid debts. Liens can delay or derail a home sale, and lenders typically won’t finance properties with unresolved liens. In some cases, sellers may offer to pay for a title search to help streamline the process or attract buyers.
What is Title Insurance?
Title insurance protects your ownership rights. While homeowners insurance covers damage or loss to your property, title insurance protects you against legal or clerical issues—like past ownership disputes, errors in public records, or fraudulent claims.
Is Title Insurance Required?
If you’re taking out a mortgage, your lender will require lender’s title insurance to protect their investment. You can also opt for owner’s title insurance, which is highly recommended. This protects your rights as the homeowner—typically up to the full purchase price of the home.
What if I’m Buying in an HOA or Condo Community?
If you’re buying in a homeowners association (HOA) or a condominium, you’ll still receive a deed and title to your property. However, HOA or condo rules may place certain restrictions on how you use or modify your home. Condo owners also share ownership of common areas, like lobbies or gyms, in addition to owning their individual unit.
What About Co-ops?
Co-ops are different. Instead of owning your unit outright, you purchase shares in the cooperative corporation that owns the building. In return, you receive a proprietary lease for your specific unit—so there’s no traditional deed involved.
Final Thoughts
Closing day is the finish line for one chapter—and the exciting beginning of another. Understanding deeds, titles, and the steps in between helps you approach your home purchase or sale with clarity and confidence.
Because rules and requirements can vary by state and locality, always consult your REALTOR® and a real estate attorney to ensure you're fully informed.
For more tips and trusted information, visit facts.realtor.
