What Is Deed Vesting?

The principle of vesting is an important tenet of property rights, and the application of the principle usually determines the owner's ability to use and profit from their personal property. As a result, vesting has important implications in real estate and the recording of real estate documents called title deeds. Homebuyers, sellers and realtors do well to understand deed vesting to protect their interests in a property transaction.

Simply put, vesting is the legal term for assuming ownership and the rights that come with it. Owners with vested rights to a property are allowed to enjoy the rights entitled to a holder of real property, including the right to sell it. Under the law, a third party cannot take away a vested right from a property owner. In a real estate transaction, the title deed -- a document that conveys ownership -- that is enforceable is called the vesting deed.

When more than one owner is entitled to a property, all of its owners have a vested right to the property. While the manner of deed vesting varies from jurisdiction to jurisdiction, the most common cases of joint ownership come about through marriage or purchase partners.

In the case of marriage, both of the partners legally own the property completely in an arrangement known as "tenancy by the entirety," rather than a percentage of the property. A single person or legally registered business that purchases a property is also a tenancy by the entirety, though ownership in the business may not be.

In some cases of joint ownership, especially outside of marriage, two or more owners may be entitled to a percentage of the property by the conditions of the deed. In this situation, the owners are legally considered to be in a "tenancy in common." This arrangement is different from tenancy by the entirety because a percentage owner of a property -- called a co-tenant -- may sell their interest in the property independently of the other owners.

In real estate, the use of a property by its owner is sometimes restricted by terms written into its deed. These terms are usually called deed restrictions or covenants, and are recorded by the governing jurisdiction -- usually a county government -- along with the deed itself.

In court cases, the owners are restricted by the terms of the "last vesting deed," the immediately preceding and legally enforceable deed. This is true even if they have not reviewed the vesting deed before closing their purchase with a seller. Because the last vesting deed is the only enforceable title to a property, this document can restrict buyers whether or not they are aware of its terms at the time of purchase.