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Real Estate I > Chapter 6 - Transfer of Title > Flashcards

Chapter 6 - Transfer of Title Flashcards

1
Q

What are the two meanings of Title?

A

Title also serves as evidence of ownership and could provide that evidence if challenged in court..

  1. Title to real estate means the right to or ownership of the land and represents the bundle of rights.
  2. Title is the means of referring to ownership and not a piece of paper as such.
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2
Q

Voluntary Alienation - what does that mean?

A

Voluntary alienation is the legal term for the voluntary transfer of title either by sale, gift or will.

To transfer title during one’s lifetime, a deed of conveyance is used

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3
Q

To transfer title during one’s lifetime, what is used?

A

A deed of conveyance is used.

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4
Q

What is a deed?

A

A deed is the written instrument used by an owner to convey real estate to another intentionally.

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5
Q

How does something become truly enforcable in court?

A

To be valid, a deed must be in writing (statute of frauds)

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6
Q

What is the grantor?

A

The grantor is the person conveying (ie. selling or gifting)

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7
Q

What is the grantee?

A

The grantee is the person acquiring the property.

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8
Q

Who signs the deed?

A

Only the grantor signs (executes) the deed

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9
Q

How does a grantor execute a deed?

A

The grantor must have the legal capacity to execute the deed.

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10
Q

Most states require that a valid deed contain the following elements:

A
  1. Grantor who has the legal competency to execute (sign) the deed
  2. Grantee named with reasonable certainty of being identified
  3. Recital of consideration
  4. Granting clause (words of conveyance)
  5. Habendum clause (to define ownership taken by the grantee)
  6. Accurate legal description of the property conveyed
  7. Any relevant exceptions or reservations
  8. Signature of the grantor which must be acknowledged
  9. Delivery of the deed and acceptance by the grantee to pass title
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11
Q

What does a deed also need to include?

A

A deed may also include a description of any limitations on the conveyance or recital of any exceptions and reservations (subject to clauses) that affect title to the property.

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12
Q

Voluntary Alienation

Conditions for a Grantor:

A
  1. The grantor must be of lawful age: usually 18 years old. A deed signed by a minor is voidable
  2. Grantor must be of sound mind. (Generally any grantor who can understand the action is viewed as mentally capable of executing a valid deed. A deed executed by someone who is mentally impaired at the time of execution is voidable (not necessary void). If the grantor has been judged to be legally incompetent, the deed is void.)
  3. The grantor’s name much be spelled correctly and consistently throughout the deed. Documentation of name changes is required and the deed should reflect name changes
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13
Q

Conditions for Grantee:

A
  1. To be valid, the deed must name a grantee so that the person to whom the property is being conveyed can be identified
  2. If co-ownership is involved, the granting clause should specify the ownership rights to the property – eg. joint tenants or tenants in common
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14
Q

Consideration:

A

A valid deed must contain a clause of acknowledgement that the grantor has received consideration (usually $$)

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15
Q

Granting Clause:

A
  1. A deed must contain a granting clause that states the grantor’s intention to convey the property.
    “Sally Smith, shall convey… to June Cleaver and to her heirs and assigns forever…”
  2. In order to convey property, the grantor must have a vested interest in the property which is the present right, interest, or title to property that gives the holder the right to convey it to another.
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16
Q

Habendum Clause:

A
  1. When necessary a habendum clause defines or explains the ownership to be enjoyed by the grantee.
  2. A habendum clause begins with “to have and to hold…”
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17
Q

Legal Description:

A

A deed must contain an accurate legal description of the real estate to be conveyed.

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18
Q

Exceptions and Reservations:
A deed must specifically note:

EG: Permanently affordable housing restrictions on the deed.

A

A deed must specifically note any encumbrances, reservations, or limitations that affect the title being conveyed. These restrictions include easements that run with the land, or restrictions on the grantee’s use of the property. Eg. permanently affordable housing restrictions on the deed.

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19
Q

Signature of Grantor:

A
  1. All grantors on the deed must sign to convey the property.
  2. Most states allow an attorney-in-fact to sign on behalf of the grantor(s). Note: an attorney-in-fact is the person designated by a power of attorney.
  3. An attorney-in-fact need not be an attorney.
  4. Some states may require a spouse not on title to sign the deed conveying ownership in order to waive any homestead rights.
  5. In Colorado, the signatures on the deed must be notarized and identification must be provided.
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20
Q

Does an attorney-in-fact need to be an attorney?

A

No

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21
Q

Acknowledgement:

A

Is the Notary.

  1. An acknowledgement is a formal declaration that the person who signs a written document does so voluntarily and that his or her signature is genuine.
  2. The declaration is made before a notary public or an authorized public officer, such as a judge, justice of the peace, or other authorized person as described by state law.

(Closings are for a closing title company. Or Attorneys)

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22
Q

Delivery and Acceptance:

A
  1. Title is not considered transferred until the deed is actually delivered to and accepted by the grantee.
  2. The deed may be delivered in person or through a third party.
  3. The third party is generally known as an escrow agent. In Colorado, the escrow agent is generally called a “closer”.
  4. The effective date of the transfer of title from the grantor to the grantee is the date of delivery of the deed itself .
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23
Q

In colorado what is an escrow agent usually called?

A

escrow agent. In Colorado, the escrow agent is generally called a “closer”.

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24
Q

in colorado, what is a “closer”?

A

An escrow agent

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25
Q

Execution of Corporate Deeds:

A
  1. A corporation can convey real estate only by the authority granted in is bylaws or on a proper resolution pass by its board of directors.
  2. Deeds to real estate can only be signed by an authorized officer of the corporation.
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26
Q

Types of Deeds:

A
  1. General Warranty Deed
  2. Special Warranty Deed
  3. Bargain and Sale Deed
  4. Quitclaim Deed
  5. Deed of Trust
  6. Trustee’s Deed
  7. Reconveyance Deed
  8. Deed Executed pursuant to a court order
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27
Q

General Warranty:

A

A general warranty deed provides the greatest protection to the buyer.

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28
Q

The grantor is legally bound by the following covenants or warranties:

A
  1. Covenant of Seisin
  2. Covenant against encumbrances
  3. Covenant of quiet enjoyment
  4. Covenant of further assurance
  5. Covenant of warranty forever

Not only are they providing those 5 covenenants, Therefore, they are not limited to matters that occurred during the time the grantor owned the property.

The grantor defends the title against both himself or herself and all those who previously held title.

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29
Q

Deeds used for the Transfer of Title in Colorado:

A
  1. General Warranty Deed
  2. Special Warranty Deed
  3. Bargain and Sale Deed
  4. Quitclaim Deed
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30
Q

Covenant of Seisin:

A
  1. The grantor warrants that he or she owns the property and has the right to convey title to the property
  2. The grantee may recover damages up to the full purchase price of the property if this covenant is broken.
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31
Q

Covenant Against Encumbrances

A
  1. The grantor warrants that the property is free from liens or encumbrances, except for any specifically stated in the deed
  2. If this covenant is breached, the grantee may sue for the cost of removing the encumbrances
32
Q

Covenant of Quiet Enjoyment

A
  1. The grantor guarantees that the grantee’s title will be good against third parties who might bring court actions to establish superior title to the property
  2. If the grantee’s title is found to be inferior, the grantor is liable for damages.
33
Q

Covenant of Further Assurance

A

The grantor promises to obtain and deliver any instrument needed to make the title good.

34
Q

Covenant of Warranty Forever

A

The grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future.

35
Q

Special Warranty Deed:

A special warranty deed contains only two covenants:

A
  1. The grantor received title
  2. The property was not encumbered during the time that the grantor held title, except as noted in the deed

The grantor is only defending title against himself or herself.

The granting clause will contain the words “Grantor remises, releases, alienates, and conveys”.

In the case when a special warranty deed is to be conveyed, title insurance is especially important to provide protection to the grantee.

36
Q

Bargain and Sale Deed:

A
  1. A bargain and sale deed contains no express warranties against encumbrances.

The bargain and sale deed implies that the grantor holds title and possession of the property.

The granting clause will contain the words “grants and releases or grants, bargains and sells”.

The grantee has little legal recourse if title defects appear later.

This type of deed is used in some areas for foreclosure transactions.

Title insurance is particularly important when this type of deed is used.

37
Q

Quitclaim Deed:

A
  1. The quitclaim deed provides the least protection of any deeds.
  2. The quitclaim deed carries no covenants or warranties and conveys only whatever interest the grantor may have when the deed is delivered.
  3. If the grantor has no interest, the grantee will acquire nothing.
  4. If the grantee receives nothing, he/she has no recourse against the grantor.
  5. A quitclaim deed is used to convey less than a fee simple estate because the quitclaim deed conveys only the grantor’s right, title or interest.
38
Q

Quitclaim Deed pt. 2:

A
  1. Quitclaim deeds are frequently used to cure a title defect (cloud on the title).
  2. The most common use of a quitclaim deed is to convey property from one family member to another.
  3. A quitclaim deed is used to correct misspellings on the deed of the grantee’s names
39
Q

Deed of Trust:

A
  1. The means by which a trustor conveys real estate to a trustee for the benefit of a beneficiary
  2. The real estate is held by the trustee to fulfill the purpose of the trust
40
Q

Reconveyance Deed:

A
  1. Used by the trustee to return title to the trustor such as when a loan secured by a deed of trust has been paid in full.
  2. The reconveyance deed should be recorded to prevent title problems in the future.
41
Q

Deed Executed Pursuant to a Court Order:

A
  1. Executors’, Administrators’, and Sheriffs deeds
  2. These deeds are established by state statute and are used to convey title to property that is transferred by court order or by will.
42
Q

Transfer Tax Stamps:

A
  1. Some areas in Colorado have a transfer tax including Aspen
  2. Colorado also has a State Documentary Fee or Doc Fee
  3. Any transfer tax and the state documentary fee are due at closing and are paid as a percentage of the sales tax
  4. The state documentary fee is .1 per $1,000 of sale price.
  5. This state documentary fee is a buyer closing fee. A transfer tax will be charged according to area convention or as negotiated in the contract.

EXAMPLE: The state documentary fee on a $500,000 home is $50.00

43
Q

State Real Property Declaration:

A
  1. Buyer declares what personal property has been included in the sale of their home for taxing purposes.
  2. Title company completes a few basic questions and the buyer must complete the remainder including what personal property was included: eg. appliances, carpeting, window coverings and any other “personal property”
  3. The buyer must assign a value to the property and the condition of the home.
  4. The agent cannot tell the buyer what value to place on the property but can indicate that buyers can identify a used value.
  5. The form is held by the county and may at some point be used to determine sales tax due or reassess the real estate to account for personal property that was part of the transaction.
44
Q

Involuntary Alienation

A

Involuntary alienation occurs when property is transferred without the owner’s consent

Examples of involuntary alienation include:

  1. Adverse possession
  2. Eminent domain
45
Q

Adverse Possession:

A
  1. An individual makes a claim of adverse possession to take possession and ultimately title to property that was not his or hers.
  2. Adverse possession can be used by someone to take title to property from an owner that has not used or inspected the property for a period of years.

Adverse possession must include all of the following:

  1. Open (Obvious to anyone that looks)
  2. Notorious (known by others)
  3. Continuous and uninterrupted (18 years in Colorado)
  4. Hostile (without the owner’s consent)
  5. Adverse to the true owner’s possession
46
Q

What are the two examplse of involuntary alienation?

A
  1. Adverse possession

2. Eminent domain

47
Q

Adverse possession must include all of the following:

A
  1. Open (Obvious to anyone that looks)
  2. Notorious (known by others)
  3. Continuous and uninterrupted (18 years in Colorado)
  4. Hostile (without the owner’s consent)
  5. Adverse to the true owner’s possession
48
Q

Adverse Possession:

A
  1. Colorado has a new law as of July 1, 2008 (HB 2008-1108) which modified traditional adverse possession to include:The person claiming the adverse possession had a good faith belief that the person in possession of the property of the owner of record was the actual owner of the property and the belief was reasonable under the particular circumstances.”
  2. Now the burden of proof lies with the possessor to prove that they have evidence demonstrating that they were the actual owner. The burden of evidence shifted from a preponderance of evidence to clear and convincing evidence.
  3. The new law also gives judges the ability to award damages to the losing party for the loss of the land and reimbursement for property taxes of up to 18 years.
49
Q

Transfer of deceased persons property

A

A person who dies testate, has prepared a will detailing the distribution of his or her assets after his or her death

A person who dies intestate, dies without having prepared a will

When a person dies intestate, the state will disburse the deceased person’s assets according to the statute of descent and distribution – the decedent’s heirs.

50
Q

What is a person who dies interstate?

A

A person who dies intestate, dies without having prepared a will

51
Q

What happens ot a person who dies interstate?

A

When a person dies intestate, the state will disburse the deceased person’s assets according to the statute of descent and distribution – the decedent’s heirs.

52
Q

The gift of real property by will is known as a:

A

Devise - and the person who receives the property is known as the devisee

53
Q

The give of personal property by will is known as a:

A

The give of personal property by will is known as a bequest.

54
Q

The gift of money by will is known as a:

A

The gift of money by will is known as a legacy.

55
Q

A will is an instrument made by an owner to convey

A

A title to real or personal property after the owner’s death.

56
Q

While the testator, the person who makes a will, is alive, any property included in a will still can be conveyed by the owner. True/False?

A

True

57
Q

The parties named in the will only obtain an ownership interest or title after the death of the testator. True/False?

A

True

58
Q

In order for title to pass to the devisees, state laws requires

A

that on the death of the testator, the will must be filed with the court and probated.

59
Q

Probate is:

A

Probate is a legal procedure for verifying the validity of a will and accounting for the decedent’s assets.

60
Q

Legal Requirements for Making a Will:

A
  1. A testator must have the legal capacity to make a will. That is to say they must be of legal age and sound mind.
  2. To demonstrate sound mind, the testator must have sufficient mental capacity to understand the nature and extent of the property he or she owns.
  3. The completion of a will must by a voluntary act, free of any undue influence by other people.
  4. In most states, a written will must be signed by the testator before two or more witnesses who are not named as devisees in the will.
  5. A testator may modify a will at any time before their death by executing a codicil which is a modification or amendment for the will.
61
Q

Transfer of Title by Descent:

A
  1. When a person who dies intestate, title to his or her real estate and personal property passes to the decedent’s heirs as determined by state law.
  2. Under a state’s statute of decent and distribution, the primary heirs of the deceased are his or her spouse and close blood relatives.
  3. The property is distributed according to the state laws where the property is located.
62
Q

Probate is a formal judicial process that:

A
  1. Proves or confirms the validity of a will.
  2. Determines the precise assets of the deceased person.
  3. Identifies the persons to whom the assets are to pass.
63
Q

Who can be the grantor?

A

The seller or giftor

64
Q

What are some of the conditions that must exist for a deed to be valid

A
  1. Has to be written (In Colorado)
  2. Has to be in the right mind (Sober)
  3. Competent mentally
  4. Grantors Name
  5. Names have to be written correctly
  6. Legal description needs to be accurate
  7. Preferrably 18+ (if not, needs someone on behalf to sign in order to be non-voidable)
  8. Needs an acknowledgement
  9. Delivery and acceptance
65
Q

What happens if a grantor is under 18?

A

Contract is voidable

66
Q

What is a title defect also called?

A

A suit to quiet title

A cloud on the title

67
Q

What is the statute of frauds?

A

To be valid, a deed must be in writing (statute of frauds)

To be enforcable

68
Q

What is an acknowledgement?

A

An acknowledgement is a formal declaration that the person who signs a written document does so voluntarily and that his or her signature is genuine.

69
Q

What is a Notary?

Document Notarized

A

Check if you are who you say who you actually are

70
Q

When is the effective date of the transfer of title from the grantor to the grantee?

A

The effective date of the transfer of title from the grantor to the grantee is the date of delivery of the deed itself .

71
Q

Deed of Trust is like:

A

A mortgage, gives the public trustee the ability to foreclose if the person fails to pee

72
Q

What makes a general warranty deed a general warranty deed?

A

Protection to the buyer

Gives

73
Q

What is a state documentary fee

A

is a buyer closing fee. A transfer tax will be charged according to area convention or as negotiated in the contract. (10 cents per thousand)

EG: something that used to be 5 dollars is now 50 dollars

74
Q

What is a buyer closing fee?

A

A state documentary fee. A transfer tax will be charged according to area convention or as negotiated in the contract.

75
Q

What is the process called to adjudicate (go into court) a will after someone has passed?

A

Probate the will

Real Estate I (17 decks)

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