What is a Title deed and Its Types?

The title deed is a very crucial document when you buy a real estate property. Let’s learn more about it.

Title deed is also identified as sale deeds and is real estate databases utilised in India and foreign countries. They have their past associated with a far-fetched history when the record-keeping criterion was very archaic.

Compared to the previous functionality, they seem far better now. Title deeds are of utility when the property gets transferred from one owner to the other. For this transactional functionality to be conducted easily, you must provide all the necessary details in the sale deed.

What is Meant By Title Deed?

Title deeds elucidate many databases about the property, such as: who is the owner of it, the owner’s rights and privileges, and the cost of the property. It is compiled at the clerk’s office and can be easily found on the internet and in government offices. However, it is often understood as a sale deed, but in essence, a title deed is a more substantial term which explains its utility. It also speaks about the rights and responsibilities of the owner. When a deed is registered, the person who transferred the property now has legal ownership of the property. As a result, it is similar to the title deed (sale deed).

Is Title Deed Crucial?

Generally, the title deed is kept in a secure place, and it will be challenging to obtain a replacement if it is left or stolen. As a result, people frequently keep them zeroed in to replace them if the original is no longer available. Having a title deed in hand is essential so that, whenever necessary, they can use it while ownership gets transferred.

Types of Title Deeds

Renunciation Deeds (Quitclaim Deeds)

They are also known as quick claim deeds. These deeds often transfer property among family members, move properties into living trusts, and cure title shortcomings. However, a quitclaim deed does not validate the grantor’s right over the property. In some situations (such as abolishing title deeds), grantors consciously deed property that is not theirs to sell. Additionally, quitclaim documents do not ensure the absence of title issues like tax liens or easements. Quitclaim deeds need a high level of confidence and are chosen by people who know each other well because there are no legal safeguards against liens or encumbrances.

General Warranty Deeds

Compared to quitclaim deeds, they give the buyer the most security. It stipulates that the grantor owns and can sell the property whenever they want. It also ensures that the property does not have any loans or liens against it.

Special Warranty Agreements

These deeds have touched upon sufficient protection; if specified, it is for two guarantees. The very first one is that the grantor holds title to the property. Secondly, it also ensures that there should be no financial burdens upon the property, like liens or loans. Still, it has a catch as it does not mention encumbrances associated with when they have possession.

Deed of Grant

It is also identified by two more names: a special warranty deed and a limited warranty deed. It has some similarities with the general warranty deed regarding the protection and guarantees it offers, with one key differentiator. It only provides coverage for the time that the seller holds the property. If the buyer has to face a small claim over the property from the previous owner, then it is his sole responsibility to deal with it, and there should be no bearing on the previous owner. If the buyer had the good fortune, the cost of defending the title gets covered by the insured amount.

Negotiation and Sale Agreement

It includes foreclosure sales of houses. This deed typically transfers the title to the new owner but does not cover other shortfalls. Homeowners who use a bargain and sell the deed to buy a foreclosed house could run into title issues, troublesome easements, or tax liens. Before buying a foreclosure, some purchasers conduct a title investigation, obtain title insurance, and hire a real estate attorney to reduce the hazards of a bargain and sale transaction.

Deed of Trust

It is a deed used in home loans and is considered by three parties: a lender, a borrower, and a trustee. While loaning, the trustor transfers the property title to the trustee, and the trustee holds the property in its name until the lender pays off all the remaining debt. Supposedly, if the trustor is unable to pay the loan on time, then the trustee can sell the property, and he can use the proceeds from it to repay the loan.

Mortgage Deed

This deed functions similarly to a trust deed with one exception. It features only two parties; one is a lender, and the other one is a borrower. The trustee who holds the deed in his name cannot get converted into a mortgage deed. The property’s title will be evenly demarcated and equally distributed until the mortgage is fully paid. In that situation, the title gets attached to the homeowner, who has no debt.

What Effect Do Liens and Title Problems Have on a Deed?

As mentioned earlier, a deed’s rights or benefits depend on its nature. Consequently, the type of deed that the seller will be able to transmit may be affected if a property has liens on it or if there are title complications with a home.

For example, when a property’s owner still owes money on liabilities, a lien may be put on that property (usually to a bank or creditor). A general warranty deed, which ensures that there aren’t any debts, liens, or encumbrances on the property, cannot be used by the owner since a lien precludes the transfer of a quitclaim deed.

The same appears true if there is another title problem with the property. For instance, the grantor can only issue a quitclaim deed to the buyer if they legitimately have title to the property.

What Kind of Deed is Used Most Quite Often?

The general warranty deed is the kind of deed most commonly used in real estate transactions. This deed offers the most comprehensive safeguards for a buyer through its provisions. A general warranty deed typically has six stipulations in its wording (or promises).

The grantor is the property’s lawful owner and is authorised to transfer its title. There aren’t any liens, debts, or encumbrances on the property (either before or during their ownership tenure), and if a legal issue does emerge, the grantor will be accountable for resolving it.

However, a state’s legal structure will govern whether or not a covenant is included. Therefore, a deed’s stipulations and the objects it guarantees may contradict each other.

How Can a Lawyer Help With the Transfer of a Deed?

While it is possible to convey a deed without the assistance of a lawyer, doing something appropriately can be tremendously complicated because of the stringent guidelines and regulations that must be fulfilled. Therefore, you should take the advice of a local real estate lawyer for further information if you need any guidance regarding transferring, drafting, or acquiring a deed.

Your lawyer can assist you by ensuring that the transfer is successfully carried out and that the transaction complies with pertinent laws and the relevant protocol. Your lawyer can also help you choose the suitable type of deed and defend you if there are any disputes about the deed or its transfer.

Conclusion

A title deed is a legally binding document that functions as ownership documentation for real estate. Although a title deed might be issued for yet another category of property, title deeds are most typically used as evidence of ownership for homes and automobiles. A title deed is essential when somebody seeks to transfer ownership of their property since it confers significant rights and privileges on the possessor in many countries worldwide.