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Certificate of title

Certificate of title is a money term you need to understand. Here’s what it means.

What is a certificate of title?

A certificate of title is a statement provided by a title company or attorney stating that the title to the real estate or vehicle is legally held by the current owner.

Deeper definition

A certificate of title can apply to any ownership of real property or a possession. It is most commonly applied to home and vehicle purchases, but it can apply to any other property that bears a title.

Once the purchaser makes their final payment to the lender, the purchaser becomes the legal owner of that property and the possessor of its title. At this point, a municipality or government agency grants the purchaser a certificate of title in his or her name.

The certificate of title carries the name of the person who is responsible for the property until the point at which that person decides to sell it to another. It doesn’t contain any information about the loan or previous owners.

The certificate of title has identifying information on it, to identify the property and the person holding the title. This includes information like the vehicle identification number (VIN) or license plate number for a car or an address for a home or other real property. Additionally, the owner’s name and address also are listed on the certificate of title.

A certificate of title varies for a deed, though the two do overlap a little in their functions. Deeds are only used to define ownership for purchases of real property, thus someone would only receive a deed at the end of paying off a mortgage.

On the other hand, the certificate of title applies to a much broader ownership umbrella, which has many categories.

Certificate of title example

If you purchase a car, you receive the certificate of title to your car in your name when you pay off the loan to your lender.

Generally, this loan is obtained through state local department of motor vehicles or a third-party title organization. Your certificate of title will list your vehicle’s registration information, including the license plate number, your name and address.

Close to paying off your car? Learn more about how to obtain your title when your car  loan is paid.

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