What is a title?
Updated March 9, 2022
In real estate, a title is a legal document and a bundle of rights that outline the ownership of the property. The proof of ownership is often in the form of a deed, an official written document declaring a person’s legal ownership of a property. The title is more abstract, referring to the concept of ownership rights, including the right to sell. Boats, cars and many other property items of value also often have titles.
In real estate, the bundle of rights associated with ownership of the title include possession, control, exclusion, enjoyment and disposition. Possession means that the title holder has the right to possess the property, and control means that the property can be used in any way that is not illegal.
The title holder also has the right to exclude people from entering the home or property.
With the exception of easements for things like utility line access and warrants for property searches, you’re allowed to bar anyone from entering your home that you don’t want there. Enjoyment means that you can enjoy your home and property as you see fit as long as it is legal, and disposition means that you can transfer ownership of the property to someone else. The rights can vary by state and might have different limitations, such as whether the property taxes have been paid.
When you purchase a home, the title is transferred to you. You want to make sure the title is clear and legal before you buy. Credit: Tierra Mallorca/Unsplash
When a home or property is sold, there will be a transfer of title at the closing from the seller to the buyer through an escrow or title company. To verify that the title of the property is clear and legal, the title company will conduct a title search and prepare a title report.
In the search, the title company combs through public records and other land records to confirm that the home does indeed belong to the person selling it and that there are no roadblocks to the sale such as unpaid taxes, an outstanding mortgage or other liens on the home. Although anyone can legally conduct a title search, it is typically done by a title company or a real estate company.
If you are financing the purchase of a home, most lenders require that you purchase title insurance to protect yourself, and the bank, from title defects. Such insurance, a one-time buy, protects the homeowner after the closing should someone later sue to say that they had a claim against the home before the current homeowner purchased it. Title insurance provides protection as long as you own the home.
At the closing, the seller will transfer the title to the buyer, giving the buyer legal ownership of the real estate. The title or escrow company will then ensure that the deed is properly recorded with the local authorities, such as a county assessor’s office or courthouse.