House Title: What You Need To Know

Owning property is legally complex. With most other purchases, you can simply go to the store, hand over some cash, get a receipt and no one will ever question whether you truly own the item in question. Buying a home is a lot different.

When you buy a home, you’ll need to go through the process of taking title, which means that you become the legal owner of the home. Explore the details to understand what a house title is before moving forward.

House Title, Defined

A house title represents all of the legal rights surrounding the ownership and use of a residential property. A property title isn’t a document; it’s a concept used to establish a property owner’s “bundle of rights.”

Bundle Of Rights

The bundle of rights encompasses all of the rights that come with being a property owner. It means you have the right to:

• Possess the property (Right of Possession)
• Use the property (Right of Control)
• Enjoy the property however you wish (Right of Enjoyment)
• Sell, rent or transfer ownership (Right of Disposition)
• Limit who can enter the property (Right of Exclusion)

These rights may be limited by the laws, easements or liens on the property or homeowners association (HOA) rules. While you generally have the right to use your property as you wish, your HOA might restrict certain activities. For example, if you want to install a unique front yard sculpture or paint your house a different color, your HOA might have guidelines that prohibit such additions or updates.

Chain Of Title

Chain of title refers to the history of ownership of a home. When a home is in the process of being sold, its chain of title will be thoroughly scrutinized to ensure that the seller actually has the legal right to sell the home and that the buyer will be able to take possession of the home without any encumbrances that could jeopardize their ownership or cost a lot of money to remedy. This is called a title search.

Typically, a title company performs this search during a home purchase transaction. They comb through public records to ensure that the title is clear.

Why Is The House Title Important?

A home’s title tells us who legally owns it and who has a claim to the property. You might think that the person selling the home legally owns it and that you'll be the legal owner when they sell it to you. But it’s not always that simple.

Identifying Potential Title Issues

For example, let’s say somewhere along the chain of title on a home, the property was sold when it was supposed to be willed to some long-lost heir. Unaware of this, you buy the home. Then a few years later, this long-lost heir comes knocking at your door – or rather, their door. If that heir can prove that they’re the rightful owner of the property, you could lose your home.

More commonly, a homeowner will, knowingly or not, try to sell a home that has some type of lien on it. Maybe they have property taxes they never paid or a contractor performed some work on the house and was never paid for the job. If the sale goes through, the new owner becomes legally responsible for those debts.

Conducting A Title Search

A title search will usually catch these things and prevent the sale from moving forward until any issues are resolved and the title is clear. If a problem with the title comes to light after you’ve purchased the home, title insurance could protect you from any related financial loss.

Purchasing Title Insurance

If you’re relying on title insurance as your protection, you’ll have to purchase an owner’s title policy in addition to the lender’s title policy required by the mortgage company that protects its interest in your home from an investment standpoint. Without the owner’s policy, your mortgage company will be covered, but you won’t be able to rely on it for a new home.

House Title Vs. Deed

Remember that a house title refers to the legal ownership of a property. It’s not a document. If you hold title on a property, you own it.

A property deed is the legal document that officially transfers ownership of the property from its previous owner to its new one.

When you buy a house, the seller (also known as the grantor) will sign this document, deeding the house to you (the grantee). The deed will then be filed with the appropriate government office for your county, such as the clerk or the register of deeds.

Essentially, the deed is the physical document that proves you hold title to your home.

Primary Methods For Holding House Title

There are a few different ways homeowners can hold title to a property. These different methods can change how ownership interest is divided among co-owners and who that interest will be passed onto when an owner dies.

Below are some of the most common ways a homeowner can hold title and how they typically work. However, the types of ownership available to you and the specifics of those types can vary depending on your state’s laws.

Sole Ownership

This method for holding title is pretty straightforward. A sole owner holds title to a property in their name only; they don’t share ownership interest with anyone else.

This type of ownership is most often utilized by single homeowners or married individuals who want to be the sole owner of the property. If you’re a married person buying a house without your spouse, your spouse may need to formally relinquish their right to that property by signing a quitclaim deed or otherwise wa