CH 8 Allocating Title Risk Flashcards
What is a “Gap Search”?
It is a post-title commitment and pre-close title check which makes sure there are no NEW liens on the property being purchased.
What are the 3 types of title which can be conveyed?
(1) Marketable Title
(2) Insurable Title
(3) Record Title
What did marketable title require historically?
It required the property be free from encumbrances.
What does marketable title mean in modern times?
It means that there are reasonable assurances that you (buyer) will not be subject to adverse claims…otherwise put, a reasonable person could take it to market and sell it.
In Staley v. Stevens the seller could.could not convey marketable title because of the setback line encumbrance issue.
Could not.
What does it mean to have insurable title?
It means that a title company is willing to issue insurance on the property.
What does it mean to have record title?
It means that the title contains whatever is of record, and the buyer takes the property subject to what is recorded with that title.
What is an encumbrance?
A non-possessory right or interest in the property held by a third party that reduces the property’s market value, restricts its use, or imposes an obligation on the property owner.
What is an encroachment?
An unauthorized extension of an improvement across a boundary line.
What are the most common encroachments?
Fences
Title is not marketable where ________ ____________ ________ __________ _________ ________.
where a buyer faces a reasonable risk of future litigation
In Staley v Stevens (with the setback issue) what would the sellers have had to do?
They would have had to obtained waivers from the rest of the neighborhood…which would still leave buyers open to litigation in the future.
Title also is unmarketable if it would…
expose the party holding it to litigation.
In Scott v. Turner, where title was unmarketable due to the issue of obtaining a variance…a good lawyer would get around that by
having buyers put a condition in the contract that seller must obtain a variance from the city or buyer would get to terminate.
What are the six deed covenants?
(1) Seisin
(2) Right to Convey
(3) Covenant against Encumbrances
(4) Covenant of Quiet Enjoyment
(5) Covenant of Warranty
(6) Covenant of Further Assurances
Out of the six deed covenants, which 3 are considered “present” covenants?
First three…
(1) Seisin
(2) Right to Convey
(3) Covenant against Encumbrances
Out of the six deed covenants, which 3 are considered “future” covenants?
Last three…
(4) Covenant of Quiet Enjoyment
(5) Covenant of Warranty
(6) Covenant of Further Assurances
What is the deed covenant of seisin?
The grantor warrants that he is the owner of the property.
What is the deed covenant of right to convey?
The grantor has the legal right to convey the estate the deed purports to convey.
What is the deed covenant against encumbrances?
The grantor promises there are no encumbrances on the land.
Does the buyer’s knowledge of an encumbrance preclude recovery?
No, but if the encumbrance is visible, many courts provide an exception.
What is the deed covenant of quiet enjoyment?
The grantor promises that the grantee may possess and quietly enjoy the land.
What is the deed covenant of warranty?
The grantor warrants the title to the grantee.
What is the deed covenant of further assurances?
The grantor promises to give whatever further assurances may be required in the future to vest the grantee with the title that the deed purports to convey.
