When a deed transfers property, it’s really transferring a bundle of legal rights known as title. Professional deed preparation requires an understanding of the relationship between deeds and title, including concepts like the warranties of title and how they relate to the available deed types in a given state.
What is real estate title?
In real estate terminology, title means the owner’s legal rights to property. Real estate title includes five property rights:
- The right to possess the property;
- The right to use the property;
- The right to exclude others from possessing or using the property;
- The right to encumber (make loans against) the property; and
- The right to transfer the property.
These five rights, known as a “bundle of rights,” define ownership.
What is the difference between real estate title and a property deed?
Title is the legal ownership status; a deed is a legal document that conveys that status from grantor to grantee and proves that title transferred.
| Term | What it is | Nature / Notes |
|---|---|---|
| Title | Legal ownership status (bundle of rights) | Abstract; proven by documents |
| Deed | Instrument that transfers title | Physical; recordable document |
| Grantor | Party to the deed who transfers title | Individual, business, or trust |
| Grantee | Party to the deed who receives title | Individual, business, or trust |
How can I transfer real estate title?
A property deed is the primary way to convey title. Common deed types include warranty deeds, special warranty deeds, grant deeds, and quitclaim deeds.
Title can also transfer in three other ways:
- By operation of law. In some situations, the law will automatically transfer title to a new owner when a triggering event occurs. For example, probate proceedings or survivorship laws may transfer title on the death of an owner.
- By court order. A court order can serve as a deed substitute to transfer title. For example, court orders may be issued in legal proceedings to quiet title, foreclose, or confirm a tax sale.
- By government action (dedication or condemnation). Although uncommon, the government may take the property from the owner if necessary for the public good. A government taking transfers title.
Each transfer is (or should be) recorded in the public land records to create public notice. The public land records form the chain of title, the chronological record that traces how title moves from grantor to grantee. The chain of title consists of all recorded documents affecting the property’s title. Every deed or other transfer forms a link in the chain of title.
What is the relationship between the type of deed and the title to the property?
Any valid deed transfers title when signed and delivered. But the type of deed—via it’s warranty of title—does not change the transfer itself. Rather, the deed type allocates risk for title defects. For example:
- A general warranty deed guarantees clear title and makes the grantor legally responsible for all title defects in the chain of title, no matter when they arose.
- A special warranty deed and grant deed both include a guarantee from the grantor, but the guarantee only applies to title defects arising during the grantor’s ownership.
- A quitclaim deed and deed without warranty (no warranty deed) provide no guarantee at all.
These differences do not affect the title transfer, only the quality of title.
What is quality of title?
Quality of title measures how secure an owner’s claim to real estate is. It tracks whether the ownership is free from title defects.
In the real estate industry, title that is valid and free of defects is called “marketable title.” Marketable title has the highest value. Any reasonable buyer would accept marketable title because there is little risk that the buyer will lose the property or end up in court.
If the title has defects, the owner must take curative legal action to fix the problems. Owners cure defects through quitclaim deeds or corrective deeds, by obtaining releases from lienholders, or through court action (probate proceeding or a quiet title action).
How does a quitclaim deed affect quality of title?
The type of deed determines financial responsibility to fix title problems. If the deed provides a warranty of title that covers the defect, the grantor is legally responsible to fix the problem. If the grantor uses a quitclaim deed (which provides no warranty), the grantee takes the property as-is.
In most states, a quitclaim deed in the chain of title is not a problem. As long as the quitclaim deed is otherwise valid, it effectively conveys the property to the grantee. But in a few states, quitclaim deeds are disfavored.
Under Texas deed law, for example, a quitclaim deed does not give the grantee bona fide purchaser protection. That means that a grantee who takes title through a quitclaim deed cannot claim protection as an innocent buyer if title problems later arise. In Texas (and states with similar rules), a quitclaim deed in the chain of title impairs the quality of title.