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Are a Deed and Title the same thing? | What is a property title? | What is a property deed? - YouTube
Channel: Laura Gallant
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if you're a first-time home buyer your real estate聽
professional is going to ask you this question,聽聽
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how do you want to take title?, They're asking聽
because the offer purchase contract asks them for聽聽
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that information. Now it needs to jive with聽
who's going to be on the loan because that聽聽
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offer contract is going to go to your lender.聽
If you're the only one who's going to be on the聽聽
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loan then it's going to be in your name only聽
and how you take title is something that's聽聽
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really important. In today's video, I'm going to聽
answer these questions, "What does it mean to take聽聽
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title?" "Is a deed the same as a title?" "Why is聽
the title investing so important?" Stay tuned.聽
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Hi Laura Gallant here with Mountain聽
Prairie Living, empowered by ERA Shields,聽聽
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and on this channel I answer questions about the聽
home buying and selling process, to lower your聽聽
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stress. I offer answers, not anxiety. If you're聽
in the middle of buying and selling your home,聽聽
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or you are a homeowner and you have questions,聽
I hope to answer them here. Subscribe to聽聽
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the channel so let's get to today's topic.
So what does taking title mean? It is describing聽聽
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the right or claim of ownership of that property,聽
it's defining that you have a right of ownership聽聽
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to that property, that's what title is. When you聽
define the type of ownership that you're going to聽聽
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take, and I'll go over the top five that you can聽
take, you're defining who owns what percentage.聽聽
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Maybe it's sole ownership and you own the whole聽
thing, maybe it's soul ownership in a trust,聽聽
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maybe it's a joint tenancy where it has the聽
right of survivorship or tenants in common,聽聽
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and I'll go over all those in a minute. It defines聽
how the property is divided as far as percentage聽聽
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of ownership, it also defines how that property聽
will be split in case one of you passes away or聽聽
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you both pass away. Here are some key reasons why聽
the title vesting of your real estate is really聽聽
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important, I'm going to read them from this list.聽
Number one, it helps your survivors know how you聽聽
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want the property to be handled after you're gone.聽
It defines how the proceeds of the property sale聽聽
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should be divided. It can prevent probate often聽
a family will place a property in a trust to聽聽
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prevent taxes for survivors and make it easier聽
for them to transfer the title to their ownership聽聽
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upon your death. But it has tax implications聽
for the owners and the survivors. That's why聽聽
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it's really important that you understand the聽
ways that you are choosing to take the title.
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So what are the five most common聽
ways to take title? If you're married聽聽
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you can take the title in what's called joint聽
tenancy, it's the most common use of title when聽聽
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two people are married and it depends on the聽
state that you live in, I'll talk about that聽聽
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one in a minute, joint tenancy offers the right of聽
survivorship. You cannot divide the percentages,聽聽
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it is a straight 50 50 if it's it's two people,聽
but you can have joint tenancy for more than聽聽
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two people but everything is divided equally.聽
So you cannot make it as different percentages.聽聽
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In joint tenancy it's survivorship, so say聽
it's you and your wife and your wife dies聽聽
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you automatically take full ownership of the聽
property. If three of you are involved maybe聽聽
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your parents are on the title and you are on the聽
title and they pass away it would automatically go聽聽
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to you. Now there would be some tax implications,聽
depending on their will or things that are other聽聽
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additional things that are involved, but joint聽
tenancy is the right of survivorship. It's聽聽
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typically done with married couples and it has聽
equal distribution of the percentage of ownership.
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Common property with the right of survivorship聽
is utilized in states that have common property聽聽
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states and there's a variety of them so if聽
you're watching this video check out what聽聽
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your state offers but it's very similar聽
to the joint tenancy I mentioned above,聽聽
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however, it has a few differences. One, you must聽
be married to use this form of title vesting. It聽聽
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does have the right to will your percentage聽
to another person, so your heir could obtain聽聽
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part of the property rights after you聽
die. If you put that in your will.
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Tenants in common is being used more聽
often because there are a lot more people聽聽
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who are not married buying homes together. Maybe聽
your two friends going in together because,聽聽
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darn it, it's hard to get a down payment together聽
so you decide you're going to both invest in this聽聽
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property. You should absolutely have an agreement聽
on the side about who's doing what, where, when,聽聽
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but you're going to take property title vesting聽
as tenants in common so that division of property聽聽
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can be written out. So one person could be 60%聽
ownership and one person could be 40% ownership聽聽
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so that they only own the rights to 40%of that聽
property so tenants in common is being used聽聽
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more often but it does have the right to the heirs聽
obtaining that person's percentage if they were to聽聽
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pass away without a will it will go to probate and聽
that could cause some issues. So if you are going聽聽
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to do tenants in common you want to make sure聽
you consult with legal counsel as well as a CPA聽聽
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to ensure that if somebody was to pass away,聽
that that is outlined and defined for you to聽聽
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prevent any probate issues or any heir obtaining聽
that percentage, issues that you didn't want.
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Sole ownership means that that one person聽
owns the entire property in its entirety.聽聽
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Now as I mentioned earlier you might be聽
asked who's going to go on the title?聽聽
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How is this going to be vested? and initially, you聽
might have a spouse whose credit is not very good,聽聽
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and so from a lending standpoint, it made聽
more sense for you to apply for the loan聽聽
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and therefore you to purchase the聽
property, so only your name will be聽聽
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on the title. That can cause some issues but I'm聽
going to give you some solutions. Sole ownership聽聽
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means just you own the whole property outright.聽
Now if you were to die you would have to have a聽聽
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will to identify where you want those property聽
rights to go, or it will end up in probate.
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The fifth most common way of聽
taking title is in a trust,聽聽
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and this is often used as parents age because聽
it protects the surviving children or surviving聽聽
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heir who's going to take this property, from聽
some of the extensive taxes that may occur,聽聽
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so they'll establish a Trust and the trust will聽
own the property outright. So the Trust will聽聽
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define how things will go, as will the will of the聽
people who pass away define how their percentages聽聽
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will go. Those are the five most common ways to聽
vest title on a property. You can imagine that the聽聽
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vesting of title is an important issue. It can be聽
changed by using a deed. Let's talk about what a聽聽
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deed is and what the difference between a deed and聽
a title is? So is a deed the same as the title?聽聽
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They're not. What a deed does, it's a legal聽
instrument that is recorded by the county聽聽
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assessor and it's recording the transfer of聽
ownership. So when you're purchasing a home聽聽
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say Mrs. Smith is selling to Mr. Rogers. The聽
deed is the instrument that says Mrs. Smith聽聽
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is transferring the ownership to Mr. Rogers, it's聽
recorded and the property now transfers ownership聽聽
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to M. Rogers. The title defines how that ownership聽
is held, and as I said earlier it will have聽聽
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a variety of different implications. I want to聽
talk a little bit more about transferring title.聽聽
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The most common transfer of title besides a聽
loan transaction or a purchase transaction聽聽
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is what's called a Quit Claim Deed and you can use聽
a Quit Claim Deed in a variety of times. I'm going聽聽
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to go over a few of them now. Earlier i said that聽
if your spouse's credit was bad, and you applied聽聽
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for the loan only in your name, and the contract聽
had to be only you purchasing it, but after that聽聽
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transaction is closed you wanted your spouse to聽
be on titles in case anything happens to you,聽聽
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you would use a Quit Claim Deed to transfer the聽
title from just you soul owner, into maybe joint聽聽
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tenancy with your wife so that if anything happens聽
to you the property will go directly to her so she聽聽
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can provide for your children. if you have that.聽
you can do a Quit Claim Deed after that loan is聽聽
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closed. What you need to understand though, is聽
the transfer of title to the two of you does not聽聽
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transfer the responsibility of the loan to her,聽
so you are still solely responsible for that loan.聽聽
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Another way you can use a Quit Claim Deed and I聽
used it when I got married. I had my own house I聽聽
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sold it, and then I married my husband, and he聽
had his own house, and it was only in his name,聽聽
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I asked to have a Quit Claim Deed to put both聽
of our names on the title. I did not have any聽聽
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responsibility to the current loan he had, but聽
as we moved forward additional loans that we did聽聽
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had, had both of our names on them and utilized聽
both of our credit. We used a Quit Claim聽聽
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Deed in that situation when you're marrying聽
somebody who already has a piece of property.聽聽
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The third use is one where it's most commonly聽
used is in a divorce, but I want to be really聽聽
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clear and caution you, a lot of times people聽
think that when they've signed a Quit Claim Deed聽聽
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that they've released themselves聽
of the obligation of the loan.聽聽
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If there is a loan in both of your names when聽
you get divorced and it's still due and payable,聽聽
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you are still liable to that loan even though聽
you're no longer on the title of the property聽聽
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anymore you are still responsible for that loan.聽
If by chance your spouse does not pay the bill, it聽聽
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affects both of your credit not just theirs so the聽
best recommendation would be to have that spouse聽聽
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refinance the loan into just their name so that it聽
clears the loan that had both your names on it. It聽聽
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transfers the title at that point and then you're聽
clear of not only the obligations of the loan but聽聽
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also you're no longer on the title and maybe聽
that's the way they give you the cash for your聽聽
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percentage that you owned in that property,聽
that's the smartest way. if you use a Quit Claim聽聽
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Deed just remember you're still responsible for聽
a loan if you signed on a loan for that property.
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Thanks so much for watching, if you found聽
value in this video then give it a like,聽聽
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subscribe to the channel, and share it with a聽
friend. If you'd like to know more about what聽聽
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happens between pre-approval and final聽
loan approval once you're under contract聽聽
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then check out this video next. Thanks聽
so much for watching have a great day
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you
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