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Real Estate Title is a legal term for the “bundle of rights” in a piece
estate property in which a party may own interest.
Sorry that this is one of the pages that you will encounter some “legalese” but I judge it to be important to be here for a quick read if necessary be. As always, I will try to make it as “light” as possible.
Title is an almost abstract concept. You need understand it and, in some instances, take a leap of faith to grasp it.
The title is is at the same time the right of ownership and serves as evidence of that right.
Whoever owns the real estate title is the owner of the property.
Clearing Up Much Confusion About Real Estate Title:
In the USA documents of title are not only used for real estate, but it is also used for motor vehicles: your car, truck or boat will also have title.
When such documents are used, they are often part of a recording system whereby ownership of such property can be verified.
The deed is the legal instrument to transfer a real estate title.
Real estate title is different from other kinds of titles because it offers “rights” the others do not.
For instances, if you own a truck, you do not own the air above, it has no right to water or minerals below it. Although you enjoy the fully right of possession, the moment that you assign the wheels to somebody else, something will be amiss to your own enjoyment
Real estate title is a legal term for the bundle of rights in a real property in which a party [individual, corporation or trust] may own.
There is much confusion on what is the title and what I the deed.
In my mind, “title the wine” and “deed is the bottle” that contains the wine.
Sometimes I like to go a bit more “abstract:” I like to think that the “deed” is the perfume/cologne and the ”title” is the scent – people will know that you have it on you but they cannot touch it or see it.
Title is fluid and it cannot be touched, but it is the very “essence” of what you acquire with your real estate property.
A “deed” is a "signed” and, in some instances, “sealed” legal instrument in writing used to grant a right.
The deed, yes, will be recorded in the county’s courthouse.
How real estate title can be held
Title can be held by an individually, jointly, in trust and still by a corporate or in a partnership form.
When you find the property you want to buy, you will be asked how you would like to hold the title for you new home.
Please give it a good deal of thought. As a matter of fact, once that you are already reading about it, please start thinking of it right now.
Depending on how the title is held can have deep legal and tax consequences.
When you by a property it is vitally important to make sure whose name you want in the “title.”
As you can see on my page “Bundle Of Rights” - the many rights may be separated and held by different parties.
As the owner of a real estate property you are said to have “title” to it. As long as you own it outright which means the title has to be free and clear.
Chain Of Title
That is the reason why when you put a contract on a home, as part of the closing process a lawyer or a title company will be hired to ”examine the title.” They will go back successive changes of hand of that property and make sure that the record is clear.
They can go back up to fifty years, what is called “chain of title” to make sure there is nobody else other than whoever is the current seller with claim in the property. Once the title is judged “free and clear” the sale can proceed.
It will be at this point in time that “liens” against the property may surface… and if there is any, it has to be “satisfied” [paid] before sale can proceed.
It is widely considered that the “chain of title” – once proved that there is no fraud - is the real proof of ownership, not the “deed.”
It is always a good idea to get “title insurance” when you buy a property – no matter how good the deal sounds and no matter that you know the seller “for many, many years.”
You also should purchase title insurance when you buy a house in foreclosure.
NOTE: Please understand that this is not hazard insurance and it is separate from it.
“Title Insurance” will insure that, in case some question on previous ownership may arise, your “full” investment on the property will be protected – value of the land included
Hazard Insurance, commonly known as “home insurance” – covers any damages caused to the structure of the house itself. Like hail damage or a tree that fall over the house. It does not cover the land because it supposed to be indestructible…
Therefore you always pay insurance in the approximately value to replace the house, which is less than the total value which includes the land.
OK, hope I have clarified the subject. There are many more details about real estate title that are out of the scope of this site.
This is the bare minimum what one would need to understand about “title” from the point of view of “home buying.” And as we move to examine the more common types of homes you may buy, this will be useful to have a good understanding.
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JC Fagundes, Qualifying Broker
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