deed
A legal document that transfers ownership of real property from one party to another, recorded with the county to establish the chain of title.
Example
“At closing, the seller signed the deed transferring legal ownership of the property to the buyer.”
Memory Tip
DEED = the document that DOES the transfer. Sign the deed, own the property.
Why It Matters
A deed is the legal proof that you own your property, which is critical for protecting your investment and determining what you can do with it. Without a properly recorded deed, you could lose your home to someone else claiming ownership, and you would not be able to sell, refinance, or pass the property to your heirs.
Common Misconception
Many people think that having a mortgage means the bank owns their home, but the deed shows the actual owner while the bank holds a lien for the loan amount. Once you pay off the mortgage, the lien is released and you maintain full ownership rights.
In Practice
When Sarah purchases a house for 350,000 dollars with a 280,000 dollar mortgage, the deed is recorded showing her as the owner even though the bank has a lien on the property. When she sells the house 10 years later for 425,000 dollars, she uses the deed to prove ownership and transfer it to the buyer, while her remaining mortgage balance of 220,000 dollars is paid off from the sale proceeds.
Etymology
From Old English 'daed' (act, thing done) — a legal ACT transferring ownership.
Common Misspellings
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