First, let’s review the differences between a warranty deed and a warranty of title. Also known as a property deed, a warranty deed to a home is a written document that serves as a record of real estate ownership. Warranty deeds are used to legally transfer the title of a property. Title refers to the actual legal ownership rights of your home and is not a physical document.
Warranties of title are included in warranty deeds. A warranty of title is a guarantee from the seller that they can legally sell the home and that there are no liens on it. A lien on a home gives someone a legal claim to a portion of a property for money owed. Typical liens include tax liens for unpaid taxes, mechanical liens for failing to pay contractors and mortgage liens. When a home has no liens or loans on it, it’s considered to have a clear title.
During the mortgage closing process, a title company will research any title claims to check ownership and make sure the title is valid. The title company is commonly involved in closing, acting as the escrow agent . If you are buying a home, it is typically up to you to hire the title company.