Knowing the significance of property titles and deeds, as well as their differences, is crucial for property owners in Alabama. Sometimes real estate diction can be confusing and difficult to remember. By breaking down both titles & deeds and consulting with trusted legal experts, Alabamans can be confident when engaging in the property buying and selling process. Let’s take a closer look at the importance of titles and deeds in Alabama, as well as their key differences.
What is a Property Title?
It is important to first understand the basic concepts of a property title in Alabama. Essentially, holding title means to have the legal right to own a property. Along with this right comes the right to use or sell the property. This is important to know, as problems can arise when the party selling the property does not hold proper title. Naturally, holding proper title is a legal requirement for selling a property.
When purchasing a property, the seller is transferring title to the buyer. A certificate of title is required from the seller in the event of a sale. The record of title for a property will show its previous owners, clearing up any questions relating to outside claims or disputes of ownership. Ensuring proper title before purchasing a property is crucial, as it protects the buyer from unforeseen liens and other legal issues that can arise after the sale.
What is a Property Deed?
A property deed is distinctively different from a property title. Unlike a property title, a property deed is a physical legal document that, when a property is sold, is given over to the buyer. This transfer represents the legal transfer of ownership from seller to buyer. There are also additional steps in the process of legally transferring ownership of a property in Alabama, including the signing of documents and county procedures. In Alabama, there are a few different types of deeds commonly used in these real estate transactions, including warranty deeds, special deeds, and quitclaim deeds. Let’s break these down further:
Warranty Deeds
The most common type of deed used in real estate sales in Alabama is a warranty deed. They are so common because of the protection that they provide for the buyer. Essentially, warranty deeds guarantee that the party selling the property is the undisputed title holder of the property. This protects the buyer from any unforeseen liens or claims against the property after the sale is completed.
Special Deeds
Another common form of deed in Alabama is a special warranty deed. These are different from common warranty deeds because they have a different protection structure for the buyer. Essentially, it guarantees that the seller of the property has not encumbered the property during their time of ownership. However, special warranty deeds do not typically guarantee security from any potential legal issues that could arise due to ownership prior to the seller.
Quitclaim Deeds
When family members transfer ownership of property within the family, it is common to use a quitclaim deed. These deeds make no guarantee or promise regarding the current state of the property and its title. This means that if there are liens, unpaid taxes, or other claims against the property, they will remain with the deed. These types of deeds are more common for transfers between close friends and family that do not involve money.
Why Are Property Titles and Deeds Important in Alabama?
Now that we have a better base understanding of the concepts of property titles and deeds in Alabama, we can see why they are important. In the real estate selling and purchasing process, titles and deeds are everything. Title represents the right of ownership to a property, and thereby the right to sell it. Without proper title, ownership of property cannot be legally transferred. This is also where the importance of title insurance comes into play.
Title insurance is essentially insurance that can protect both the buyer and the seller of a property. For example, when purchasing a home, title insurance protects the buyer from liens, fraud, and document errors that can occur. Title insurance can also protect the lender from fraud on the part of the homebuyer.
Essentially, property titles and deeds are important in Alabama because they are the legal standard by which ownership of a property is defined. Without them in proper order, legal ownership of a property can get messy. Liens and claims against a property can arise after a purchase, leaving the buyer in a predicament. When you do have property title and deeds in proper legal order, you can rest easy knowing that ownership of your property has legally been clarified as yours.
Property Title and Deed Law with MM&G
Legal issues in the real estate world are no new occurrence. The process of transferring legal ownership of a property can be meticulous, confusing, and time consuming. With the help of a trusted and experienced commercial and residential real estate law firm, you can feel confident and safe when buying and selling property in Alabama. Muncie, Mattson, & Gunter provide services including preparation of purchase & sale agreements, title examinations & opinions, closing on residential purchases & sales, and issuance of owners’ & lenders’ title insurance.
If you are entering the purchasing or lending process, MM&G is ready and willing to help keep you safe from fraud and other risks. Contact us today for more information, or give us a call!