House Title: What It Is And Common Ways To Hold It
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When you buy a home, you become its title holder. Holding a house title is what gives you ownership rights over your property, and there are several ways an individual or a group of individuals can do it. Despite it being an extremely important concept in the real estate world, title is something that’s often misunderstood by homeowners and prospective buyers.
In this article, we’ll discuss what a house title is and how it differs from a property deed, plus some of the most common ways to hold a house title, and how you can protect your rights as a title holder.
What Is A House Title?
A house title, also referred to as a property title, is a concept that denotes ownership rights over a given real estate property. The holder of a house title has the right to use and make changes to their property, and, depending on how they hold title, they may transfer their share of the title to a different owner on their own or through an agreement with their property co-owner.
When you become the new title holder of a property and you aren’t the first person to have held title there, it can be wise to familiarize yourself with something called the chain of title. This is the complete ownership history of the property. If there are any liens or encroachments still in place on the property that could infringe on your ownership rights, it will be indicated in records surrounding the chain of title.
A title company may conduct a title search on your behalf during the home buying process in order to make sure contractual errors aren’t made by the seller, but a buyer or property owner could also look into the chain of title themselves through their county recorder’s office.
Title Vs. Deed
House title and property deeds are two different real estate concepts involving ownership rights. Although they can sometimes be confused with one another or mistakenly used interchangeably, there are important distinctions to be made between the two.
- A title is not one specific legal document, but more of an abstract concept that gives a property owner their ownership rights.
- A house (property) deed is the actual physical document that you get on closing day in a real estate transaction, and it states – in legally binding terms – that you own the property. Deeds officially transfer title from the seller to the buyer and contain a detailed description of the property.
Common Ways To Hold Title
Specific details regarding your ownership rights and the way you hold title over a house can be found in your property deed. There are several ways homeowners can hold title. Whichever option they choose can have a significant impact on their ability to transfer ownership rights in the future.
Let’s run through a few examples of common ways that house title can be held and how it’s typically worded in a deed.
Holding title through sole ownership is self-explanatory. In this case, you are the only individual with ownership rights over your house. This method of holding title can apply to:
- Individuals who are single
- People who are legally divorced (“unmarried”)
- Married individuals who wish to acquire title to a property separately from their spouse (This may be restricted by community property statutes and other rights given to spouses in various jurisdictions.)
It’s important to note that married individuals who wish to file for sole ownership may need to file for a quitclaim deed. In this case, a quitclaim deed is used to relinquish one spouse’s rights to the property over to the other spouse.
Holding title through a joint tenancy means that two or more individuals – typically relatives, couples or close friends – have equal shares of ownership in a given property. Because joint tenants have equal ownership rights, all decisions about the fate of the property (such as renovations or putting the property up for sale) must be unanimously agreed upon.
Joint tenancy agreements can also include rights of survivorship, meaning that upon the death of one co-owner, the surviving co-owner(s) receives the deceased’s share of the property.
Holding title through community property (also sometimes called “marital property”) means that two spouses acquire real estate property during their marriage and own equal shares of the home. Under community property, either spouse has the right to dispose of or transfer their share of ownership to another party in their will as they so choose.
As is the case with traditional joint tenancy, if you hold title through a community property agreement, you can also do so with rights of survivorship.
Tenancy In Common
Under tenancy in common, the co-owners of a home have equal rights to enjoy the property during their lives. This differs from joint tenancy because tenants in common hold title individually for their share of the property and can dispose of or will away their individual ownership rights as they so choose.
Unlike joint tenancy, there is no right of survivorship option, and no other tenant is entitled to receive the deceased’s share of the property. Instead, the ownership share goes to the decedent’s heirs.
Tenancy By The Entirety
Tenancy by the entirety is reserved solely for married couples, and views that couple as a single legal entity with shared and undivided property rights. With this form of ownership, there is a right to survivorship included. If one spouse dies, the other will take sole possession of the title. Before selling, transferring or encumbering the property, each spouse will need to give the other permission to do so.
Tenancy by the entirety may not be available in all states.
In the case of a living trust, the title holder (also called the trustor) is able to maintain their ownership rights over their real estate property until they become incapacitated or die, at which time an appointed trustee will take over the control and management of the property.
In a revocable living trust, the title holder can make changes to the terms of the agreement while they’re still alive and of sound mind. In an irrevocable trust, the terms of the agreement cannot be modified, and the title holder technically transfers their property ownership rights into the trust.
Although it might sound alarming to relinquish the title you hold over your property in this case, it can actually help shield the property from estate tax. Consult a certified tax preparer or accountant if you’re unsure how to handle your property for tax purposes.
How To Protect Your House Title
The biggest thing you can do to protect your rights as a title holder is to get owner’s title insurance. Policies from an owner’s title insurance provider shield homeowners from any financial expenses should problems with their house title arise after they’ve purchased a property.
Homeowners also have the option to enroll in professional title protection services if they’re at all concerned about becoming victims of home title theft or fraud. Title holders can check with their local registry of deeds to make sure the house title is still theirs. But some homeowners appreciate the added peace of mind that comes with having a professional monitoring the status of their title as well.
You can find more information on title search and insurance from our friends at Amrock, our sister company.
The Bottom Line: A House Title Is Important
How you hold title over your real estate can affect the outcome of the sale of the property. It can also affect the taxes and fees associated with selling your home. For more information or assistance in determining the best way to hold title for your unique situation, contact your real estate attorney or tax adviser.
Ready to start your home buying process? Talk to a Home Loan Expert at Rocket Mortgage® for answers to all of your questions!