Chapter 6 - Transferring and Recording Title to Real Estate

Question 1

If a person dies with no legal heirs or relations and has left no valid will, what happens to real property owned by that person?

Answer 1

it is taken by the state according to the process called escheat

Question 2

With the exception of a Torrens certificate, the best evidence of marketable title is…

Answer 2

title insurance

Question 3

The fundamental purpose of recording instruments that affect real property is…

Answer 3

to give constructive notice of one’s rights and interests in the property

Question 4

The type of statutory deed that contains the most complete protection for the grantee is a …

Answer 4

general warranty deed

Question 5

The only required clause in a deed of conveyance is one that…

Answer 5

states the grantor’s intention, names the parties, describes the property, and indicates a consideration

Question 6

A person wishes to convey any and all interests in a property to another without making any assurances as to encumbrances, liens, or any other title defects on the property. This party would most likely use …

Answer 6

a quitclaim deed

Question 7

What is ‘chain of title’?

Answer 7

a chronology of successive owners of record of a parcel of real estate

Question 8

The Torrens system differs from other title recording systems in that

Answer 8

title is conveyed only when conveyance is registered on the title certificate

Question 9

The purpose of a covenant clause in a deed of conveyance is to

Answer 9

state the grantor’s assurance or warrant the grantee that a certain condition or fact concerning the property is true

Question 10

Just prior to passing away, a person tells two witnesses that she would like her estate to pass to her husband. One witness records the statement and signs his name. This is an example of…

Answer 10

an unenforceable nuncupative will

Question 11

If a person having several heirs dies intestate, the property will…

Answer 11

pass to heirs by the laws of descent and distribution

Question 12

A one-time tax levied on a property for purposes of recording a transition is called …

Answer 12

a documentary stamp tax

Question 13

A hermit secretly lives in a cave on a 200-acre property. After 20 years, the person makes a claim of ownership to the property. The claim will likely be…

Answer 13

declined because possession was secretive

Question 14

For a deed to convey title, it is necessary for the deed to be…

Answer 14

accepted by the grantee

Question 15

Legal title

Answer 15

title that can be documented and is available through public records.

Question 16

Equitable title

Answer 16

a beneficial interest in real property that gives the title holder the right to acquire legal title to the property. Equitable title holders cannot transfer legal title to real property, but they derive benefits from the property’s appreciation in value.

Question 17

Voluntary transferring of title includes

Answer 17

public grant, deed, will

Question 18

Involuntary transferring of title includes

Answer 18

descent escheat, foreclosure, eminent domain, adverse possession, estoppel

Question 19

A ___ is a legal instrument used by an owner, the grantor, or transfer title to real estate voluntarily to another party, the grantee.

Answer 19

deed

Question 20

To be legally valid, delivery of the deed requires that the grantor..

Answer 20

-be competent at the time of delivery
-intend to deliver the deed, beyond the act of making physical delivery

Question 21

It is necessary for the deed to be ______ and ______ by the grantee for title to pass.

Answer 21

delivered to and accepted

Question 22

A deed must meet the following requirements for validity…

Answer 22

-be delivered and accepted
-have a competent grantor and legitimate grantee
-be in writing
-contain a legal description
-include consideration
-be signed by the grantor
-be acknowledged

Question 23

Recording is ____ necessary to make a deed valid.

Answer 23

not - although it is in the grantee’s best interests to do so

Question 24

Conveyance clauses

Answer 24

describe the details of the transfer

Question 25

The principal conveyance clauses are...

Answer 25

-granting clause or premises clause (the only required clause) -habendum clause -reddendum clause or reserving clause -tenendum clause

Question 26

Granting conveyance clause

Answer 26

aka premises clause, the only required clause, contains the conveyance intentions, names the parties, describes the property, indicates nominal consideration

Question 27

Habendum conveyance clause

Answer 27

describes the type of estate being conveyed (fee simple, life, etc)

Question 28

Reddendum conveyance clause

Answer 28

aka reserving clause, recites restrictions and limitations to the estate being conveyed (eg deed restrictions, liens, easement, encroachments, etc)

Question 29

Tenendum conveyance clause

Answer 29

identifies property being conveyed in addition to land

Question 30

Covenant clauses present

Answer 30

the grantor's assurances to the grantee

Question 31

A deed of conveyance usually contains one or more of these covenants

Answer 31

-warrant of seisin -warrant of quiet enjoyment -warrant of further assurance -warranty forever, warranty of title -warrant of encumbrances -warranty against grantor's acts

Question 32

Warrant of seisin covenant

Answer 32

assures that the grantor owns the estate to be conveyed, and has the right to do so

Question 33

Warrant of quiet enjoyment covenant

Answer 33

assures that the grantee will not be disturbed by third party title disputes

Question 34

Warrant of further assurance covenant

Answer 34

assures that the grantor will assist in clearing any title problems discovered later

Question 35

Warranty forever; warranty of title covenant

Answer 35

assures that the grantee will receive good title, and that grantor will assist in defending any claims to the contrary

Question 36

Warrant of encumbrances covenant

Answer 36

assures that there are no encumbrances on the property except those expressly named

Question 37

Warranty against grantor's acts covenant

Answer 37

states the assurance of a trustee, acting as grantor on behalf of the owner, that nothing has been done to impair title during the fiduciary period

Question 38

The most common deeds are

Answer 38

statutory deeds - in which the covenants are defined in law and do not need to be fully stated in the deed

Question 39

Bargain and sale deed

Answer 39

the grantor covenants that the title is valid but may or may not warrant against encumbrances or promise to defend against claims by other parties "I own, but won't defend"

Question 40

General warranty deed

Answer 40

or warranty deed for short is the most commonly used deed. It contains the fullest possible assurances of good title and protection for the grantee. "I own and will defend"

Question 41

Special warranty deed

Answer 41

the grantor warrants only against title defects or encumbrances not noted on the deed that may have occurred during the grantor's period of ownership or trusteeship "I own and will defend against my acts only"

Question 42

Quitclaim deed

Answer 42

transfers real and potential interest in a property, whether an interest is known to exist or not. "I may or may not own, and won't defend"

Question 43

Special purpose deed

Answer 43

is one tailored to the requirements of specific parties, properties and purposes

Question 44

Types of special purpose deeds

Answer 44

-personal representative's deed -guardian's deed -sheriff's deed -deed of trust -deed in trust -master deed -partition deed -patent deed -tax deed

Question 45

Personal representative's deed

Answer 45

used by an executor to convey a decedent's estate, also called an executor's deed

Question 46

Guardian's deed

Answer 46

used by a court-appointed guardian to transfer property of minors or mentally incompetent persons

Question 47

Sheriff's deed

Answer 47

used to convey foreclosed property sold at public auction

Question 48

Deed of trust

Answer 48

used to convey property to a third-party trustee as collateral for a loan; on the satisfaction of the loan terms, the trustee uses a reconveyance deed to convey the property back to the borrower

Question 49

Deed in trust

Answer 49

used to convey property to the trustee of a land trust

Question 50

Master deed

Answer 50

used to convey land to a condominium developer; accompanied by the condo declaration when recorded

Question 51

Partition deed

Answer 51

used to convey co-owned property in compliance with a court order resulting from a partition suit; a partition suit terminates an estate when one or more co-owners want to dissolve their relationship and are unable to do so without the assistance of a court

Question 52

Patent deed

Answer 52

used to transfer government property to private parties

Question 53

Tax deed

Answer 53

used to convey proeprty sold at a tax sale

Question 54

State law usually requires payments of a _____ on a conveyance of real property

Answer 54

documentary stamp tax

Question 55

Exemptions from transfer tax include

Answer 55

-transfer within the immediate family -consideration less than a certain amount -transfer between government entities or non-profits

Question 56

A will, or more properly, a last will and testament

Answer 56

is a legal instrument for the voluntary transfer of real and personal property after the owner's death. It describes how the maker of the will, called the testator or devisor, wants the property distributed. A beneficiary of a will is called an heir or devisee. The property transferred by the will is the devise

Question 57

A will takes effect

Answer 57

only after the testator's death

Question 58

A will, is an amendatory instrument, meaning

Answer 58

that it can be changed at any time during the maker's lifetime.

Question 59

A will generally takes one of the following forms

Answer 59

Witnessed - in writing and witnessed by two people Holographic - in the testator's handwriting, dated and signed Approved - on pre-printed forms meeting the requirements of state law Nuncupative - made orally, and written down by a witness; generally not valid for the transfer of real property

Question 60

State law establishes requirements for a valid will. The law generally requires that:

Answer 60

-the testator be of legal age and mentally competent -the testator indicate that the will is the "last will and testament" -the will be signed -the completion of the will be witnessed and signed by the witnesses -the will be completed voluntarily, without duress or coercion

Question 61

A court proceeding called ______ generally settles a decedent's estate, whether the person has died testate (having left a valid will) or intestate (having failed to do so).

Answer 61

probate

Question 62

Probate of real property occurs

Answer 62

under jurisdiction of courts in the state where the property is located, regardless of where the deceased resided

Question 63

The probate court's objectives are to:

Answer 63

-validate the will, if one exists -identify and settle all claims and outstanding debts against the estate -distribute the remainder of the estate to the rightful heirs If the will does not name an executor, the court will appoint an administrator to fulfill this role.

Question 64

Distribution by probate:

Answer 64

Testate, w/heirs: 1. creditors, 2. leagle life estate, 3. heirs by will Intestate w/heirs: 1.creditors, 2. legal life estate, 3.heirs by descent Intestate w/no heirs: 1.creditors, 2.state by esheat

Question 65

Testate proceeding.

Answer 65

If the decedent died with a valid will, the court hears the claims of lienors and creditors and determines their validity

Question 66

Laws of descent

Answer 66

Involuntary alienation occurs when a title-holder dies without a valid will. The state's statutes of descent and distribution identify heirs and the respective shares of the estate they will receive. In the absence of heirs, title transfers to the state or county by escheat.

Question 67

Abandonment

Answer 67

Property that has been abandoned for a statutory period may also escheat to the state or county.

Question 68

Types of involuntary title transfer

Answer 68

Laws of descent Abandonment Foreclosure Eminent domain Adverse possession Estoppel

Question 69

Foreclosure

Answer 69

A property owner who fails to fulfill loan obligations or pay taxes may lose an estate through foreclosure.

Question 70

Eminent domain

Answer 70

Various government and public entities can transfer private property to the public sphere by the power of eminent domain.

Question 71

Adverse possession

Answer 71

State laws may allow a real property owner to lose legal title to an adverse possessor.

Question 72

An adverse possessor is

Answer 72

someone who enters, occupies, and uses another's property without the knowledge or consent of the owner, or with the knowledge of an owner who fails to take any action over a statutory period of time.

Question 73

To claim legal title, the adverse possessor must:

Answer 73

 be able to show a claim of right or color of title as reason for the possession  have notorious possession, which is possession without concealment  maintain a consistent claim of hostile possession, which is a claim to ownership and possession regardless of the owner's claims or consent  occupy the property continuously for a statutory period of time  in some states, pay taxes

Question 74

A claim of right is

Answer 74

based on the adverse possessor's occupying and maintaining the property as if he or she were the legal owner

Question 75

Color of title results when a

Answer 75

grantee has obtained defective title, or received title by defective means, but occupies the property as if he or she were the legal owner

Question 76

Notorious possession and hostile possession give

Answer 76

constructive notice to the public, including the legal owner, that a party other than the legal owner is occupying and claiming to own the property.

Question 77

Avoiding adverse possession.

Answer 77

An owner can avert the danger of involuntary alienation by adverse possession by periodically inspecting the property within statutory deadlines and evicting any trespassers found

Question 78

Estoppel prevents

Answer 78

a person from claiming a right or interest that is inconsistent with the person's previous statements or acts

Question 79

As a basis for involuntary alienation, the doctrine of estoppel

Answer 79

can prevent an owner from re-claiming a property that was transferred under false pretenses

Question 80

State laws require the recording of all documents that affect

Answer 80

rights and interests in real estate in the public real estate records of the county where the property is located.

Question 81

title records, contain a history

Answer 81

of every parcel of real estate in the county, including names of previous owners, liens, easements, and other encumbrances that have been recorded. Deeds, mortgages, liens, easements, and sale contracts are among the documents that must be recorded.

Question 82

Title records serve a number of purposes, not the least of which is to avoid ownership disputes. Other important purposes are:

Answer 82

-Public notice -buyer protection -lienholder protection

Question 83

Public notice: Title records protect the public by giving all concerned parties

Answer 83

constructive notice of the condition of a property's legal title: who owns the property, who maintains claims and encumbrances against the property.

Question 84

Buyer protection: Title records protect the buyer by revealing

Answer 84

whether a property has marketable title, one free of undesirable encumbrances. The buyer is legally responsible for knowing the condition of title, since it is a matter of public record. Recording a transaction also protects a buyer by replacing the deed as evidence of ownership

Question 85

Lienholder protection: Title records protect the lienholder by

Answer 85

putting the public on notice that the lien exists, and that it may be the basis for a foreclosure action. Recording also establishes the lien's priority

Question 86

Chain of title refers

Answer 86

to the succession of property owners of record dating back to the original grant of title from the state to a private party.

Question 87

An abstract of title is

Answer 87

a written, chronological summary of the property's title records and other public records affecting rights and interests in the property.

Question 88

A title plant is a

Answer 88

duplicate set of records of a property copied from public records and maintained by a private company, such as a title company.

Question 89

Each state prescribes procedures and requirements for recording in public title records

Answer 89

forms, proper execution, acknowledgment, and witnessing.

Question 90

The Torrens system.

Answer 90

Certain states and counties use the Torrens system of recording. The Torrens system differs from other title recording systems in that title passes only when the conveyance has been duly registered on the title certificate itself.

Question 91

the value of a property is only as good as

Answer 91

he marketability of its title,

Question 92

To demonstrate marketable title to a buyer, a seller must show that the title is free of

Answer 92

 doubts about the identity of the current owner  defects, such as an erroneous legal description  claims that could affect value  undisclosed or unacceptable encumbrances

Question 93

The four principal forms of evidence the owner can use to support these assurances are:

Answer 93

 a Torrens certificate  a title insurance policy  an attorney's opinion of the title abstract  a title certificate

Question 94

Torrens certificate. If available

Answer 94

the Torrens certificate is the best evidence, for the reasons given earlier-- it is not merely a record, but is the title itself.

Question 95

Title insurance. In the absence of Torrens registration, a title insurance policy is

Answer 95

commonly accepted as the best evidence of marketable title. A title insurance policy indemnifies the policy holder against losses arising from defects in the insured title

Question 96

Standard title insurance coverage

Answer 96

protects against title defects such as incompetent grantors, invalid deeds, fraudulent transaction documents, and defects in the chain of title

Question 97

Extended title insurance coverage

Answer 97

protects against liabilities that may not be of public record, including fraud, unrecorded ownership claims, unintentional recording errors, and unrecorded liens

Question 98

An attorney's opinion of abstract states that

Answer 98

the attorney has examined a title abstract, and gives the attorney's opinion of the condition and marketability of the title

Question 99

A title certificate is a summary of

Answer 99

the condition of title as of the date of the certificate, based on a search of public records by an abstractor or title analyst.