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House title: What it is and why it matters

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    If you're in the market to purchase a home, the term "house title" has likely been used, amongst many other bits of homebuying jargon. But what exactly is a house title, and what makes it so important? Let's take a closer look at the significance of a house title, including why it’s relevant to homeownership, how it compares to a deed and what you'll typically see included in the document.

    What is a house title?

    A house title represents the legal ownership of a property and goes hand-in-hand with the deed. The house title shows that the current seller legally owns the property and has the right to sell the home to the buyer. During closing, the title will transfer to the new owner, making the sale official.

    Why house titles matter

    House titles matter for a few reasons:

    • House titles show who legally owns a property: This is important because the title helps prove the owner’s right to sell the home. If the seller doesn’t have a legal right to the asset, then the ownership may be contested. If you buy a home from someone who isn’t the title owner and someone does contest the ownership, you may not have the legal recourse to protect your investment.
    • House titles can show you if there are any liens or claims on a property: A lien is a legal claim on a property — one that may prevent the asset from being sold. For example, if there is a mortgage lien on a home, the lienholder (typically the lender) has a legal claim to the asset until the mortgage is paid off. It’s best practice for the seller to clear up any liens on their home before selling, and for the buyer to conduct a title inspection to protect themselves. Consider consulting a real estate professional for assistance.

    Title insurance may help protect you against any issues that come up with property ownership. This is a type of insurance that serves to protect buyers and lenders in case of financial loss due to any defects or inconsistencies in the property’s title. A title examiner will typically review the property’s history prior to the sale, in order to detect and eliminate any issues before the purchase goes through.

    What is the difference between a title and a deed?

    "Title" and "deeds" are two frequently conflated terms. You wouldn’t be alone in confusing the two, since they do go hand-in-hand. However, they are two separate entities:

    • Title: A title is a legal concept of establishing who owns a home. When you “hold the title” to a house, it means you have legal ownership over it. Upon selling your home, the title (and therefore, official ownership) of the home is transferred to the buyer.
    • Deed: A deed is the physical, legal document that spells out ownership rights (i.e., title rights) to the property. It also contains a description of the property and the property owners. Once a title is transferred (as long as it’s a clean title — one without any liens or other claims on it), the new homeowner also gets the deed.

    What’s included in a deed?

    There are five main components of a house title included in a deed: 

    1. Property description: The deed includes information on the property such as its description, size, boundaries, address and potential visual assets.
    2. Current and previous owners: The deed includes a list of current and previous owners of the house, known as the “chain of title.” This may help you trace any outstanding issues with the property’s ownership status.
    3. Liens: The deed includes information on any known liens on the property. As mentioned previously, a lien is a legal claim to property that may give another party (typically your lender) a right to repossess the asset if you fail to pay.
    4. Restrictions and covenants: The deed includes any restrictions and covenants on the home. This may include zoning restrictions, HOA rules, environmental restrictions or building restrictions.
    5. Other important legal notes: The deed also includes other relevant legal notes that must be communicated to each buyer, such as past issues with the home or potential property restrictions.

    Can more than one person hold the title to a home?

    It’s worth noting that there are multiple ways you can hold the title. However, you’ll typically be the sole owner or have joint tenancy.

    As the sole owner, you usually have complete ownership over the property and don’t legally share it with anyone else. This typically means you can do what you please with the asset — you can sell, renovate or transfer ownership of the property as you please, although it’s best practice to consult a legal professional.

    If you have joint tenancy, this means you share the title with one or more people. The ownership and control of the property is often shared amongst this group.

    In summary

    A house title dictates legal ownership over a property. The title is typically transferred during closing when both parties sign the necessary documents and complete everything necessary to complete the sale. Although the title and deed typically go together, they are technically separate things. Some titles are owned on an individual basis, while others may be owned by two or more people.

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