A deed conveys ownership to real property. The legal document does not, however, automatically guarantee title. Title means a landowner owns a piece of land subject only to liens of record. An attorney provides a title opinion, or certificate of title, that details any liens affecting the underlying deed. Usually, you receive both a deed and certificate of title when you buy land. But, you can have a deed to land and not have a clear title.
Title and a Warranty Deed
A warranty deed is the preferred document for a buyer of real property. When a seller, or grantor, executes a warranty deed to the buyer, or grantee, he is guaranteeing, or warranting, good title to the property, subject only to any restrictions noted in the deed itself. For example, title may be subject to the right-of-way of the local electric company over the front 10 feet of the property, or the rights and restrictions of a homeowners association. It takes a title search by an attorney to determine the state of a title conveyed by a warranty deed.
Title and a Quitclaim Deed
A grantor uses a quitclaim deed to transfer to a grantee whatever interest in a piece of real estate the grantor owns. There's no warranty or guarantee of title. A quitclaim deed can be used to extinguish a potential claim by an heir of a previous owner or to correct a mistake in a prior deed. The key feature of a quitclaim deed is the lack of any claim to title. By itself, a quitclaim deed doesn't prove title.
Deed of Trust and Title
In some states, a deed of trust is used as a mortgage document. The deed of trust transfers title to a trustee who holds the property for the lender. As long as the borrower makes timely payments, the deed of trust is of no effect except to act as a lien against title. If the borrower sells the property prior to his loan being paid in full, the total balance owing must be collected and paid out of the sales price to clear title for the new owner. If the borrower fails to make payments on time, the trustee can foreclose on the property.
Deed and Title Insurance
An attorney performs a title search on a deed that determines if there are any liens affecting the title. The attorney then prepares a title opinion or certificate of title. That document is submitted to a title insurance company; the company then issues a policy upon payment of a one-time premium. Title insurance gives the new owner protection for the title and land subject only to any liens found by the attorney in the title search. The title insurance policy, in effect, becomes proof of title.