The Difference Between a Title and a Deed

Sometimes, we “more experienced” investors throw jargon around and assume everyone knows what we are talking about.

That however is often not the case, especially when a newbie is listening. From time to time therefore I like to get down to basics to make sure everyone is one the same page. This time I want to quickly talk about a couple of legal terms real estate investors throw around all the time, titles and deeds.

What is a Title?

Title is very important in real estate. It is much more than what is found on a book cover. Title defines the formal rights of ownership, ownership of things like real estate or cars. By having a title to certain lands or property, you have certain rights to those lands or property. This is why when you purchase a property you often hear the term, “taking title” to the property. One of these rights that you usually purchase is possession or use of the property. However this right of possession does not always have to be included.

Titles can convey different rights to different parties. For example, a title owner can sell mineral and oil rights, but retain the rights to use the surface. As another example, a farmer may wish to preserve the open nature of his farm forever. Thus he may choose to sell the development rights (the rights to develop a shopping center or subdivision) to a land trust whose stated purpose is to preserve the property as open space. Or you can sell and easement, which only grants access rights to a specific part of a property.

It is important to remember that just because you …read more