Chapter 6 - Property Ownership and Title Transfer Flashcards

Question

What is the US Gov Rectangular Survey System?

Answer 1

References principal meridians (vertical lines) and base lines (horizontal lines) that create ranges (vertical 6 mile columns) and tiers (horizontal 6 mile rose) The intersections of ranges and tiers create townships (6mi x 6mi blocks) that are broken into 36 (1mi x 1mi) sections

Answer 2

Labeled 1-36 starting at NE corner, moving to the W, and snaking down to end at the SE corner. The 16th section is the school section (in middle) where a school can be built

Answer 3

Usually used in metropolitan areas where blocks and lots are assigned numbers and letters. Resultant drawing is a plat map or subdivision map. Once approved by local municipality, subdivision is duly recorded and becomes part of legal description of each property

Answer 4

Show location, size and shape of building lots, roads, sidewalks, street lights, curbs and gutters, utility easements, drainage easements, etc.

Answer 5

A burden upon the title to the property, even though great benefits may be derived by the owner as a results of the encumbrance A monetary encumbrance is referred to as a lien Non-monetary encumbrances include restrictions, easements, licenses, and encroachments

Answer 6

State and local govenment property taxes owed for things like fire and police protection, schools, streets, sewers, etc.

Answer 7

State law to protect persons who provide labor or materials to improve another property. Lien is effective the date of first work or delivery of materials, not when it's filed with public records

Answer 8

Once a person sues another in court and obtains final judgement, in order to collect on the judgement, must file it in the public records. The lien is against all property the judgement debtor owns in jurisdiction

Answer 9

If law suit is in process, owner is trying to sell home, and aggrieved party cannot file a lien, they may consider a lis pendens (lien pending). This gives notice that litigation is pending and tends to prevent the property from being sold before the dispute is resolved

Answer 10

If the plantiff in a suit believes the defendent is disposing of assets to avoid judgement, plantiff may seek writ of attachment from court. This prevents the transfer of assets until the lawsuit is concluded

Answer 11

Assits in collection of judgment against defendant. The sheriff seizes the property of the defendent, sells it, and applies it against the judgement

Answer 12

Restrictions that an owner of property may put on future usage of property If owner wants to ensure property is used in a certain way, then it would be an "affirmative deed restriction" and the opposite would be a "limiting deed restriction"

Answer 13

When a developer of a restricted community, like a gated community, places restrictions on the property, including the creation of a Common Interest Community (CIC); the restrictions bind all future owners Private Police Powers - the HOA is the "government" in enforcing community rules

Answer 14

The right for someone other than the owner to use part of a property for a specific purpose. Usually recorded with legal description, noted on a plat map, or part of the property records

Answer 15

Right to access property by use of "public way". A dedicated public street or highway would be a public way A person can create an easement by necessity if their purchased property does not have ingress (entrance) or egress (exit) to the public way

Answer 16

All owners of a neighboring property may decided to create an easement to allow one owner to cross over the land of another. Not out of necessity Needs to be in writing and in a form that would be accepted in public records

Answer 17

Servient is the land which is given up for an appurtenant and dominant is the land that enjoys the right to pass over the easement

Answer 18

Does not have a dominant tenement, only a servient tenement. Most common example would be a utility easement

Answer 19

Created by: - granting in a deed - reserving in a deed - showing a landlocked condition - taking an easement by public entity by condemnation - continued long-term, conspicuous, and hostil use resulting in an easement by prescription Terminated by: - abandonment - release by easement holder (quit claim deed) - excessive use - merger

Answer 20

Giving permission by landowner to allow another to come on land for specific purpose. It's a priviledge and revocable

Answer 21

Giving permission to allow another to come onto the land for the limited purpose of removing crops, timber, soil, etc. Person receiving access profits

Answer 22

When a thing extends over the property line of another's property without permission by the owner

Answer 23

- negotiations and agreements (most desireable) - removal (by agreement or court order) - suit for damages by the property owner being encroached - utilization - allows encroached party to have benefit and use of thing encroaching - suit for easement by prescription - if there for a length of time required by state statute, has been visible and continuous may claim under "adverse possession" ownership of land being encroached on

Answer 24

A corporation, LLC, partnership, or limited partnership

Answer 25

Condition of ownership which is common to all who hold title to property. More unities there are, more owners have in common (their ownerships) with each other

Answer 26

Where ther is more than one owner to a property, they hold undivided interests meaning no owner can claim a specific physical portion of the property as belonging to that owner only

Answer 27

To divide out an interest where there are multiple owners. Can be physical or judicial (property is sold and proceeds distributed based on percentages of ownership)

Answer 28

One owner and property has been "severed" from all others

Answer 29

Two or more owner that have "one unity of title". Have undivided interests and can, therefore, access any part of the property. They may: - own unequal shares (as long as total 100%) - acquire interests at different times - acquire interest in different docs - sell or mortgage interest without offering to, or gaining permission from, other tenants in common - nature or non-natural - have interests that are inheritable - have interests that may be partitioned (physical or judicial)

Answer 30

Two or more natural owners that have 4 unities of title. Unities are (PITT): 1) Equal right of access and Possession 2) Equal Interests 3) Acquired title at same Time 4) Acquired Title in same document JT's may: - mortgage individual interest without gaining permission - sell an interest without gaining permission. Action would destroy JT status (different times) - seek physical or judicial partition

Answer 31

Upon death of a tenant, share of deceased JT is divided equally among all the surviving JTs. Sometimes referred to as poor man's probate

Answer 32

Has the four unities of title found in JT, with additional requirement that parties must be married. Cannot be partitioned, except in case of divorce, which then is divided according to agreement of parties, or court order Unsecured creditors may not lien property held in tenancy by the entireties unless unsecured debt was a joint debt of married couple

Answer 33

Form of ownership requiring existence of state statute permitting it. Creates property statute where married couple may have property which solely belongs to wife, husband, or held by them as community property

Answer 34

Property owned by an individual prior to marriage or acquired after the marriage by gift or by inheritance

Answer 35

All other property acquired by either husband or wife during marriage and each spouse is presumed to own a 50% interest in community property Differs from tenancy in entireties because there is no right of survivorship. Upon death, property would pass to estate or to heirs of deceased, not automatically to deceased party's spouse

Answer 36

A trust is a device where one person transfers real property to another for the benefit of a thirs, with understanding the RE asset will be used to care for trustor Trustor - one who transfers property Trustee - receives property Beneficiary - one who derives benefit

Answer 37

Living - established by property owners to provide for own financial care or family. Established while property owner is still alive Testamentary - organized upon the principal's death

Answer 38

Land is the only asset. Different than living or testamentary in several ways: - land is only asset - trust runs for a specific time - public records do not name beneficiaries - can be used for assembling "packages" of parcels - beneficial interest can be transferred from one beneficiary to another - trustee is usually the trustor

Answer 39

Stockholders do not own property, but own a derivative interest in the equity of the corporation, some of which might be real property Require legal formation May hold property in serveralty, tenant in common with others (human or non-human or partnership) May not hold property as joint tenant (not human) or tenants by entireties (cannot marry) or as community property (cannot marry)

Answer 40

Partner ownership not needing legal formation. Creditor can seek collection of obligation by suing any or all partners. Partners can create obligations for partnership without approval of other partners Death of a partner typically causes partnership to dissolve or if partnership continues to be formed without deceased partner included

Answer 41

Two classes: general partner and limited partner: General partner has right to full participation in activities and are liable for obligations and debts of partnership. If GP dies, the partnership must be reformed Limited partners have no right to participate in activities and are not liable beyond initial investment. If limited partner dies, interest is passed on to estate

Answer 42

Usually in major cities on eastern seaboard, where units were sold rather than rented. A corporation that owns the building and sells shares of stock, each share entitling the owner to a proprietary lease Stockholder must contribute proportional share of operating expenses and had cooperative association had approval rights on sale of a share (unit)

Answer 43

Owner owns RE rather than a share of stock. Land on which condo sits, parking, club house, swimming pool, etc. are owned by all condo owners as tenants in common Has monthly assessment against units for expenses of the common area like property taxes, insurance, maintenance, and management of condo (condo fees) Crated by developer and recorded as master deed - sets out ownership interests, bylaws, and CC&Rs

Answer 44

Mixed use development will be designed around different but compatible users, like residential, retail, restaurant, office, and medical/dental facilities Ownerships arrangement different from project to project but are similar to condos

Answer 45

Evidenced by a deed (deeded timeshare) or based upon a lease Conveys an undivided interest in the common area

Answer 46

Ownership estate estate that bundles rights of ownership for an indeterminable period of time, based on lifetime or forever. Can be fee simple or life estates Can also be classified as life estates, based upon life of the owner or some other designated person. Life estates are not inheritibale, so its necessary to pre-determine to whom the title shall pass upon the passing the named party

Answer 47

A fee simple absolute or fee simple defeasible: Fee simple estate - highest quality interest where holder has all rights recognized by law. Estate runs forever and upon death of owner, is inheritable to heirs. Ideal form of ownership Defeasible fee (fee simple defeasible) - has an attached stipulation such as "for as long as" or "during" and provided condition is not broken, the holder remains in title. After event, title reverts back to the former grantor. Becuase title can revert back. the grantor is said to have a reversionary interest. It is inheritable

Answer 48

The owner of a life estate (not to be confused w/ a tenant) who can sell the property, mortgage, lease, etc. as would any owner with the exception that things change upon death

Answer 49

Title to property will pass upon death of the owner. May name a "remainderman" who will take the title to the property as a fee simple estate. Or, creator may elect for property to revert to original owner as a reversionary interest

Answer 50

Translates to "for another's life", life estate, that dictates that title to the property the life tenant enjoys shall transfer to another upon death of some other named person

Answer 51

Created by state law. Florida "homestead" law protects a homeowner's personal residence form certain creditors. Exemption offers virtually absolute protection w/ no limite from forced sale to meet demands of creditors, except under special circumstances Residence is not protected from liens for nonpayment of property taxes, mortgage liens, construction liens, or mechanic's liens

Answer 52

Protects surviving spouse in the event the deceased spouse left the surviving spouse out of the will. Law provides the surviving spouse with 30% of decendent's net estate consisting of both real and personal property, a homesteaded property if any, and property owned as tenants by the entireties

Answer 53

The only instrument used for converyance of title of land If conveyance occurs, it is in the form of a written instrument which is "acknowledged" or witnessed by a notary public, and normally recorded in the public records in the county in which the land is located

Answer 54

1) Recordation - recorded in county in which the land is located 2) Two parties - the grantor (making the conveyance) and grantee (one to whom conveyance is made) 3) Warranties and convenants - promises by the grantor to the grantee concerning the title to the property, that some condition exists (or doesn't) and will continue to exists (or not exists)

Answer 55

1) Seisin - grantor owns property and has right and power to convey 2) Against undisclosed encumbrances - grantor has disclosed to the grantee all encumbrances 3) Quiet enjoyment - enjoy ownerships without hearing anyone make a valid claim of superior title or right 4) Further assurances - should a claim of superior title be made, grantor will defend against claim and defeat it 5) Title forever - should a party establish superior claim, the grantor will pay back to the grantee purchase price

Answer 56

Against undisclosed encumbrances - if any encumbrances, grantor has disclosed but doesn't make assurances for when property was not owned by him

Answer 57

No warranties at all - grantor is quitting any claim the grantor may have to the property, but doens't assert that ther is no claim at all. Used to remove liens and encumbrances from title and surrend claims, or clear clouds on the title

Answer 58

Implied warranty of seisin - found that only owners of property would normally enter into negotiations about a property and then agree to sell it. No written warranties and is only an implication that the grantor has title and the legal right to convey it

Answer 59

1) in writing 2) valid grantor - natural person, a live, lawful age, etc. 3) indentifiable grantee 4) consideration clause a. ) actual - purchase price b. ) nominal - $1.00 and other consideration c. ) good - for love and affection d) legal - for value received 5) granting clause - must be clause which states nature and extent of interest conveyed 6) vesting clause 7) habendum clause - "to have and to hold from this day forward" 8) valid legal description - using 3 legal options 9) exceptions and reservations a) subject to exception/encumbrances b) restrictions or easments 10) grantor's signature 11) attestation - deed in the notary public's attestation that the signing parties appeared, swore, authorized, and signed 12) acknowledgement - witnessing by witnesses of granto signing the deed 13) delivery and acceptance - must be: a) intended by the grantor b) commenced during the lifetime of the grantor

Answer 60

- assure grantee that the status of the title is as grantor warrants - provide financial assurance that title will be defended if necessary by title insurance company - pay grantee the purchase price should title be defeated

Answer 61

Prior to issuing policy, runs a title search and thorough investigation into public records to examine history of property. A "chain of title" is made ot make sure company can link owernship If there is a gap in title, it may be necessary to perfect title through "suit to quiet title" which will involve the use of a quit claim deed. Grantor is quitting any claim that grantor may have to the property, and does not even claim ot have any ownership or right to convey at all

Answer 62

Title company will prepare an "abstract of title" summarizing everything found in public records, including encumbrances and liens. Attorney may provide an opinion of title after reviewing abstract and rendering an opinion as to whether the title is marketable (good) If title company feels it's marketable, it will be issuing title insurance. The types of title insurance policies are CLTA and ALTA.

Answer 63

Covers up to the amount of purchase price against: 1) forgery of deed 2) declaration of marital status which is incorrect 3) lack of mental capacity of grantor 4) improper delivery - made by mistake or under circumstance of fraud or not during lifetime of grantor Exclusions are: 1) specific exceptions 2) unrecorded defects in title 3) matters which would be discovered through a survey -title insurance company will not go out to inspect the property for encroachments or size 4) rights of persons in possession

Answer 64

More stringent than CLTA to protect lender. Purchase by buyer for lender and extends beyond CLTA coverage. Is a stacking coverage, so it is on tope of CLTA Covers: 1) survey issues 2) matters which would be discovered upon inspection 3) unrecorded defects in title

Answer 65

An intestate person is one who has died without a will. The state has laws to ensure real and personal property is transfered to heir's according to the state's statute of descent and distribution

Answer 66

The testator (maker of will) can five away 3 classes of assets: - real property - a devise given to devisee - personal property - a bequest - money - a legacy Will must be filed with court and probated to pass

Answer 67

The formal process of making sure that will is valid and making an accounting of the assets of the deceased

Answer 68

Dower being a wife's legal interest upon husband's death to property her husband has or acquired during marriage Curtesy is similar to dower but dealing with wife's property Rights protect surviving spouse and a will cannot supercede these laws

Answer 69

- follow state law - testor must have legal capacity - will must be signed and usually witnessed by two additional people, not named in the will, who will sign the doc - a testor may alter a will at any time - done with a doc called a "codicil" - primary heirs of a decendent are spouse and close blood relatives

Answer 70

Probate: 1) confirm a particular will is valid 2) add up accounts of all decendent's assets 3) identify people who will receive assets Process is: 1) person in possession of will, normally executor, presents to court, which files it 2) anyone in possession of 2nd or 3rd will, presents to the court as well and court upholds one of the wills 3) court distributes the assets, including real property

Answer 71

Most of the time, is the title insurance company or agency Escrow instructions (or contract) is between seller, buyer, and escrow agent and is an agreement to colect all needed itemds (money, docs, etc.)

Answer 72

- escrow company begins when recieve complete purchase contract and good faith funds (earnest money). at this point "escrow has been opened" - escrow company conducts a title search to determine ownership and status of subject property. at end, title company issues a commitment to provide policy of title insurance on property - escrow agent requests payoffs for all financial items that are encumbering title - escrowee works with buyer's lenders to understand and monirot progress of loan application and underwriting - based on close of escrow date, escrowee prorates all taxes, HOA charges, interest, etc. and divides between buyer and seller - escrowee prepares settlement statement, typically referred to as HUD-1 - escrowee will set up separate appointments just before closing of escrow for buyer (loan docs) and seller (deed, disclosures, etc.) to sign docs required to transfer title - escrow agent collects buyer's funds, usually through wire transfer to escro agent's bank - escrow agent records documents with county recorder to transfer property. Agent disburses funds to seler, seller's lender (if applicable), HOAs, taxing authorities, brokers, etc. - escrow agent distributes final docs to seller's broker, seller, buyer's broker, buyer, etc. closing has happened

Answer 73

- local laws and customs - foreclosures - short sales - VA loans - agreements of the parties

Answer 74

Protect the rights of all parties, bring them to conclusion, and pass title to the holder of the mortgage or third party, usually trustee, who arranges for property to be sold at auction, free of all encumbrances

Answer 75

AKA pre-foreclosure where a mortgaged or secured property is sold for less than is owned to the lender. Lenders agree to short sales when there is little hope that the borrower can make adequate payments on the mortgage loan

Answer 76

- lender approves the buyer - lender approves contract terms - lender approves sale amount and usually demands sale price higher than cited in contract - lender demands a certain net amount from sale - close of escrow date must be met - seller vacates home - seller cannot walk away with proceeds

Answer 77

As a forgiveness or income. Amount of forgiven debt should be accounted in tax returns for appropriate years Either short or long-term capital gain

Answer 78

A significant improvement to investment property which adds value and is durable in nature and will or is expected to last several years

Answer 79

Original purchase price plus any capital improvements, less depreciation taken

Answer 80

Interest portion is tax deductible, but not principal portion

Answer 81

If you have owned and occupied a property for two out of the last fives years as a personal residence and sell it and realize a capital game, you may be exempt from the gain based on filing status If you are single and filing as unmarried, you will be exempt from first $250k. If married and either have owned 2 of past 5 years, and are filing jointly, $500k will be exempt Note a personal residence cannot be depreciated

Answer 82

At close of escrow, 10% of the gross sale price will be withheld and transmitted to the IRS (there is exclusion for residential property less than $300k in sales price)

Answer 83

To encourage investment in RE, investors are permitted to exchange or trade their property for other US investment property and may be able to do so without having a taxable event. The general rules: - must be US property - must be like kind property - must trade equal or up in vlaue - must trade equal or up in debt on property

Chapter 6 - Property Ownership and Title Transfer Flashcards

(110 cards)