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May 2022

Deed vs. Title: What’s the Difference?

1000 500 Taylor Witt

At first glance, deeds and titles seem like the same thing. Both have something to do with the concept of ownership, but if you are unfamiliar with real estate, the difference will likely be lost on you. 

However, if you’re shopping for a home or looking to sell a house you’ve inherited, you’ll want to straighten out the differences between these two concepts.

Let’s dig in.

How to Conceptualize the Difference Between Deed And Title

The most notable difference between a deed and a title is that one is tangible and the other isn’t. A deed is a physical document that legally represents the ownership of personal property, whether it’s a car or a home. The title is intangible—it is the concept of ownership itself.

Does that sound confusing? Here’s an example that can help clarify the difference—

Can You Hold a Movie?

Think of your favorite movie. What type of media grants you access to that movie? You can stream it, purchase it as a blue-ray disk, or as a digital download. Or, you can purchase a ticket and see it in the theater. 

But how do you own that movie? Its ownership is in some way imagined. That’s because a movie is intangible. It’s comprised of a series of ideas transmitted through flashes of light and dialogue. 

However, certain media grant you access to it—allow you to experience it. These media are tangible, whether a disk, a stretch of code, or a ticket.

Deeds are like the media that grant you access to property—they are the tangible representations of ownership. Titles are like the movies themselves. They are intangible and cannot be held. Instead, they are experienced through ideas of ownership, much like how films are expressed through ideas.

Now that we’ve had a little lesson in ownership philosophy, we can provide functional definitions of deeds and titles. 

What is the Role of a Deed?

A deed is a legal document representing the transfer of property from the seller to the buyer. It is only official after both parties have signed it. Deeds not only contain the signatures of the buyer and seller but also contain a description of the transferred property.

There are three types of deeds that each have slightly different uses:

General Warranty Deed

The general warranty deed protects the buyer by ensuring that the seller is the complete owner of the property, possesses the full title, and has the right to sell. It also discloses that the seller has no knowledge of damage or issues with the property. 

Special Warranty Deed

Special warranty deeds are similar to general ones, except for one key difference. The seller only guarantees the intactness of the property for the duration that they owned it. Because of these differences, most commercial deed transfers use special warranty deeds. 

Quitclaim Deed

Quitclaim deeds are used when the transfer of ownership doesn’t involve an exchange of money. Usually, these are used by business owners who want to transfer property from their possession to their business or LLC. Another use for quitclaim deeds is when a parent transfers property ownership to a relative for free.

What is the Role of a Title?

A title is the ownership itself. It is the legal right to own, use, or sell the property. The deed is a physical representation of the transfer of title. You obtain both the title and the deed when you buy a house.

Planes, Trains, and Automobiles

According to Roni Davis, writer for First National Realty Partners, a nationwide commercial real estate investing company, “Titles aren’t limited to houses and extend to other property types, like boats, cars, airplanes, and RVs, among others.”

What is the Abstract of Title?

The abstract of title is another important document that lists all previous owners of a property and any debts or liens encumbering the ownership of that property. Though the title is intangible, the abstract is like a recorded history of everything that has happened to the title before you owned it. 

When you transfer ownership to someone else, you become a part of the title’s history. 

What Rights Are Guaranteed By a Title?

As mentioned above, a title grants the owner certain legal rights. Below are the specific rights granted by title ownership.

  • Right of Possession
  • Right of Control
  • Right of Exclusion
  • Right of Enjoyment
  • Right of Disposition

If a title has more than one owner, these rights are split equally among them.

Now You Know the Difference Between Deeds and Titles

The takeaway is that a deed is the physical representation of ownership and a title is the intangible concept of ownership, including legal rights. Knowing the difference between the two is crucial for buying or selling property. 

Roni Davis is a commercial realtor, blogger, and legal assistant operating out of the greater Philadelphia area.  She writes for First National Realty Partners, a nationwide commercial real estate investing company.

What is “Highest Use” in Real Estate Appraisals?

1000 500 Taylor Witt

When appraising real estate, appraisers are trained to determine a property’s market value according to its “highest and best use,” regardless of how the property is actually being used at the time of valuation. The historical reason appraisers consider highest and best use (HBU) when performing a valuation ties back to the 19th and early 20th-century real estate concept of maximum productivity. 

This concept is still very much in play in today’s real estate market. But how does an appraiser determine the highest and best use of a piece of land? This article will explore the philosophy and practical application behind the highest and best use in real estate valuations.

How to Determine Highest and Best Use

Appraisers have certain constraints when determining the highest and best use of a property. These constraints—sometimes referred to as tests—are practical, legal, and financial in scope.

A property is tested against these constraints to determine what maximum productivity is actually practical—i.e., compliant with the law, affordable, and physically doable considering the land itself. 

There are generally four tests appraisers will use to determine the highest and best use of property: 

  • legally permissible
  • physically possible
  • financially feasible
  • maximally productive

Legally Permissible

The highest and best use of land must be legally permissible. This means appraisers must work within the existing legal framework when considering the HBU. Certain legal considerations include:

  • Zoning laws
  • Local ordinances
  • Environmental protections
  • Regulatory laws

However, what is legally permissible at the moment might not preclude future legal permissibility. For example, if a property isn’t zoned for commercial use, an appraiser can still consider it for commercial use if there is a greater than 50% chance the property would be approved for commercial use. 

Appraisers can creatively work within the legal restrictions on property to reach an HBU. 

Physically Possible

Appraisers are also constrained by what is physically possible on the property. One property’s environmental and topographical characteristics will vary considerably from another property with the same square footage. 

A 10,000 sq. ft. facility might fit well on one 20,000 sq. ft. property but won’t fit feasibly on a comparable property for various reasons. Perhaps one property is marshy or sandy or contains hazardous waste. These restrictions will affect the highest and best use of that property.

Financially Feasible

The highest and best use of a property must also be financially feasible. In other words, the projected use of a property must generate enough profit to justify the development of the property. 

If the costs of repurposing property exceed the projected revenue of the property, then that particular use of the property is not financially feasible. As a result, that particular use is not the highest and best use by default. 

Maximally Productive

The use of a property is maximally productive when it generates the highest return for its developers. One property could have several potential uses, but only one option will generate the highest profit for developers.

For example, let’s say developers just purchased a 10,000-square-foot plot of vacant land for $100,000. They have several options for generating profit with this land, but only one option will produce the highest returns. 

Option 1: Commercial Warehouse Space

Let’s say that the cost to develop this space into a commercial warehouse would be $600,000, and the market value upon completion is $800,000. When the purchase price of the vacant plot is considered, the return is only $100,000. 

Option 2: Commercial Retail Strip Mall

Let’s say the cost to develop this space into a retail strip mall would be $1,000,000, and the market value of this particular use of the property is determined to be $1,500,000. Here, the return is $500,000. 

Option 3: Luxury Apartments

Let’s say the cost to develop this property into luxury apartments is $1,500,000, and the market value of the completed project is $2,500,000. Here the return is $1,000,000. 

The maximally productive option might first appear to be option 3, as it nets a return of $1,000,000. However, the initial cost to develop this property is $1,500,000. Whether or not option 3 is actually the maximally productive option depends on the initial capital investment of the developers. This option might not be financially feasible for some developers.

Whether or not the use of a property is maximally productive is contingent upon the other constraints, too, like its financial feasibility and legal permissibility. 

Understanding Highest and Best Use

According to Roni Davis from First National Realty Partners, a commercial real estate investing company, “Calculating the highest and best use of a property is more complicated than it appears on the surface. Not only do the physical limitations of the property factor into the valuation, but the financial limitations of the developers, as well as legal restrictions ultimately determine the highest and best use of a property.”  

Guide – Purchase and Sale Agreements (PSAs)

1000 500 Sam Radbil

If you are gearing up to buy your first home, you’ll soon come face to face with an overwhelming number of legal forms, documents, and certificates. This article will guide you through one of the more important of those documents—the purchase and sale agreement. 

By the end of this article, you’ll know exactly what’s in a PSA, why PSAs are an essential part of purchasing a home, and who’s responsible for drafting it. 

Let’s begin with a definition.

Defining Purchase and Sale Agreements (PSAs)

In essence, a PSA is a legally-binding document that describes the terms and conditions of a real estate transaction. PSAs are drafted by a real estate agent or a lawyer—depending on which state the transaction takes place in—and signed by both the home seller and home purchaser.

Note that signing a PSA does not complete the purchase of a property. Instead, it simply outlines the terms, conditions, and contingencies both parties (the buyer and seller) must meet to avoid the risk of legal action.

Therefore, PSAs are like an official outline of the closing process. Signing a PSA starts the countdown toward signing the purchase agreement, which is the final document that completes the transaction. If the PSA is like the shot that starts the race, the purchase agreement is the finish line.

Now that we know what PSAs are, we can explore what’s in them.

What’s In a Purchase and Sale Agreement?

Different states will have slightly different requirements for what needs to be included in a PSA. Also, buyers and sellers might propose additional contingencies unique to a specific transaction. 

Usually, a PSA will contain the following items:

The Purchase Price

The purchase price establishes the amount of money the buyer will pay the seller in the transaction. However, most PSAs allow the purchase price to be changed if an appraisal comes back lower than expected or if an emerging issue with the property gives the buyer grounds to negotiate a lower price.

Barring a poor appraisal or sudden damage to the property, most purchase prices end up being the closing price.

Information Regarding the “Good Faith” Deposit

The “good faith” deposit is a promissory deposit that establishes the buyer’s intent to follow through on the purchase. PSAs outline specific details of the “good faith” deposit, also known as earnest money

PSAs will establish—

  • how much earnest money the buyer must pay
  • when they must pay it by
  • who manages the payment 

Additionally, the PSA will establish how much time the deposit holds for the buyer to complete home inspections and appraisals. It also outlines what scenarios allow a buyer to get their deposit back.

The Closing Date

The PSA will also establish a closing date,  which can be thought of as the finish line for the home buying process. Many affairs need to be completed before the closing date, such as the home appraisal, the home inspection, and the title search, among other things. 

Essentially, the closing date is a legally-defined deadline both parties must adhere to once the PSA is signed.

Information Regarding the Title Condition, Title Insurance Company, or Escrow Company

PSAs will also contain information on the title, how it must be transferred, how it is insured, and which company is overseeing this process. Title insurance companies or escrow companies can handle the transfer of the title. 

Depending on the state where the transaction occurs, the title’s transfer might occur at the agency or the property. All of these details are clearly outlined in the PSA.

Other Items That May Be Included in a PSA

Various Contingencies

PSAs will also outline how either party can legally back out of the contract at no additional cost. Usually, these contingencies involve appraisals or home inspections that reveal a lower price than expected or reveal a fundamental issue with the property. 

Other Documents

Certain addendums are often added at the buyer or seller’s request. These cover issues that a standard PSA might not address. For example, if the property has a septic tank, the buyer might request an addendum that requires the seller to perform a septic inspection by the closing date.

How Does the Signing Process Work?

According to Roni Davis, from commercial real estate investing company First National Realty Partners, “Usually, the buyer will send a signed PSA to the seller that contains all of the terms and conditions outlined above. If the seller likes the terms and conditions set out in the PSA, they will sign and return the PSA.”

However, buyers and sellers often negotiate on specifics back and forth by sending counteroffers until an agreement is reached.

coworking for realtors

Coworking Options & Tips for Real Estate Professionals

1000 500 Taylor Witt

Many entrepreneurs and startups begin at home, especially Realtors and agents in our industry. But major issues are developing when it comes to at-home work — isolation and a lack of self-care are limiting productivity in certain instances. Some new research by Shinesty has even proven that many at-home workers are spending full days in their underwear or even working naked (absolutely crazy, right?).

So that’s why Coworking is a great alternative for entrepreneurs and real estate agents wanting to get out of their home office, their local Starbucks, or the local library to avoid those isolation issues mentioned above. 

With a coworking office space for rent, you’re free to get your business out of your home and into your first professional address with minimal risks. Think about it: if you’re writing awesome real estate blogs from your home and you’re getting clients to respond, you need a space to bring them in for meetings, right?

There’s more. If you thought that having your own professional office space would be difficult and expensive, think again! With help from services like My Perfect Workplace, you are bound to secure the perfect office space for rent in no time!

Here are 3 pros and 3 cons to consider:

Space You Can Afford

Two coworkers collaborating sitting on chairs holding a Surface laptop with Christmas decorations in the background

One of the biggest benefits to securing a coworking office space for your real estate operation is the affordability. While many conventional office spaces are priced per square foot, coworking spaces tend to be priced at fixed rates with the possibility of discounts depending on the season, vacancy rates, and securing multiple spaces. What’s more, most coworking offices only require a small deposit, first month’s rent, and allow short-term leases. Most coworking offices offer single offices, larger suites, and single desks. Whatever your budget and requirement, your own professional office space is feasible!

Are You Qualified?

Many professionals will tell you that the qualification process for a traditional office space for rent is not easy. You’ll need to get your financial statements, credit, and business history in line before applying to lease an office. Coworking offices on the other hand, omit background checks, credit checks, and financial history. This is especially useful for new business ventures who lack all of the above. The application process is usually simple, only requiring a current bank account to take monthly rent payments and one person to be named the official lessee. 

Focus On The Things That Matter

two men laughing white sitting on chairs

Perhaps the most beneficial aspect of a coworking space for rent is the all-inclusive packages and amenities offered at most facilities. You may be thinking, “I qualify for a space within my budget, now what?” Now you relax and focus on growing your business! Most new coworking spaces are plug-and-play and are be delivered fully furnished with a desk, executive chair, and a guest’s chair so you ditch the hassle of purchasing new furniture or moving in your own. Office supplies, internet, telephones, and other utility costs will be included in your monthly rate, so you won’t have to worry about budgeting for those items. Don’t forget about common areas like a lounge, kitchen, and reception area. Most offices are stocked with snacks, coffee and tea, and a receptionist – all included in your rate to support your business!

Places like San Francisco or Los Angeles, are very popular for coworking offices and offer world-class amenities like gym memberships, gourmet catering, and leisure activities included in your monthly rent!

Not All Office Space for Rent is Created Equal

people sitting on chair

Perhaps not all coworking office space for rent is created equal and demands a thorough consideration of all possible mishaps. One of the cons of securing a coworking office is that it is generally within a shared space. While your office may be private, you share the floor with tens of other tenants/businesses. This may be an issue for some sectors who require a high level of confidentiality, professionals who thrive when the least distractions are present, or teams who meet or receive visitors regularly. Shared space means noise, scheduling and space restrictions beyond your control. 

Planning Ahead Means Really Planning Ahead

A growing business is usually a good sign of success! But we know by know, in 2021, that keeping employees of all ages engaged, satisfied and happy, just like we learned from a brand new survey, regardless of where they work is hugely important. When operating out of a coworking space for rent, it may cause some concerns. Depending on your facility, securing one, two, or three contiguous office spaces for your team may be possible depending on availability.

However, being that most other tenants on the floor operate on different length lease terms, it may not be possible to get that large corner office that would be perfect for your growing team or the small office next door for your new assistant. The burden of keeping up to date with vacancies and availabilities will likely depend on your relationship with the property manager, your resilience in finding opportunities and accurate business projections.

Not Suitable for Everyone

Coworking office space for rent is perfect for various types of industries and professionals (most of you reading this are in the real estate industry which is PERFECT for coworking options) but there is a definite and exclusive requirement for membership.

These offices are meant mostly for administrative and non-invasive type businesses that unfortunately omit a lot of sectors. These facilities usually have only gendered bathrooms located centrally on the floor and don’t meet specific health requirements demanded by some types of businesses. Medical professionals, for instance, are often disqualified from applying for an office being that facilities cannot cater to services like special waste management or running water individually in offices. Some tech professionals that require a large amount of data management find that the bandwidth offered in their coworking office space for rent is not suitable. Other businesses may demand ceiling height requirements or especially accessible hallways and doors.

Whatever your requirements or qualifications are, there is surely a coworking office space for rent for you in your city! Take your business out of your home and into a professional work environment!