Chapter 8 - Title and Title Protection

Question 1

What is a recording?

Answer 1

The entrance of written instruments into the public record to serve as constructive notice to the world of their existence

Question 2

What is a constructive notice?

Answer 2

Is notice that is deemed to be given because the facts to which it relates are readily available; or would be obvious from inspection; or could reasonably have been determined by prudent inquiry

Question 3

What is an actual notice?

Answer 3

When one knows a fact concerning a property through direct knowledge or observation, or when notice is expressly or actually given. For example, if Acker informs Barnes that he sold his house to Carter, then Barnes would have actual notice of the sale to Carter. However, if Acker sold his house to Carter and Carter recorded the deed in the recording office, then Barnes–and everyone else–would have constructive notice of the sale to Carter

Question 4

What is an acknowlegement?

Answer 4

is a formal declaration, made by the person signing the document that he is indeed that person, signing the document as a free and voluntary act. Would need to be done by “an officer of the court” such as a lawyer or notary public

Question 5

What is a bona fide purchaser?

Answer 5

is a party who has paid value for an estate or other interest in real property without actual or constructive notice of an already existing estate or interest in the same parcel. An unrecorded instrument is valid between the parties to it; however, a subsequent bona fide purchaser acquiring an interest in the property will take priority over a prior unrecorded interest

Question 6

What are exclusions and exceptions?

Answer 6

Each policy contains exclusions and exceptions which exclude liability with regard to certain defects, liens, or other encumbrances. Exclusions are those matters that the policy expressly indicates are not within the coverage provided

Question 7

What is a title insurance policy?

Answer 7

may be defined as a contract of indemnity under which a title insurance company, for a one-time payment, agress to indemnify the insured, not in excess of the policy amount, and subject to the exceptions, exclusions, conditions and stipulations of the policy, against any defect in the title which existed and affected the property being insured when the policy was issued, and was either omitted from the policy or erroneously stated therein

Question 8

What is an abstract of title?

Answer 8

a condensed historical record or brief digest of all grants affecting the property including all deeds, mortgages, wills and judicial proceedings together with all recorded liens and encumbrances affecting title

Question 9

What is a chain of title?

Answer 9

using information relevant to property transfers, a chain of title will be “run” which will attempt to trace an unbroken chain of former owners back for 60 years

Question 10

What is a continuation?

Answer 10

subsequent to the initial search, but immediately prior to closing, a continuation or “run down” search is also conducted to reveal any matters of record which have occurred between the time of the initial search and the closing of title

Question 11

What is a cloud on title?

Answer 11

is an outstanding claim or encumbrance which would impair the seller’s ability to pass clear title

Question 12

What is an action to quiet title?

Answer 12

If legal action is necessary to clarify the status of title

Question 13

What is a commitment?

Answer 13

examination of title is the process by which the information discovered in a search or abstract is analyzed by an attorney or a title insurance officer (reader) who will prepare a commitment (title report, binder) on a form prescribed by the title insurance company

Question 14

What is a marketable title?

Answer 14

is a title which, according to the court, is sufficiently free of defects and liens that the purchaser must accept the title’s condition as satisfactory. A title is un marketable if defects exist that would form the basis for a reasonable refusal by a potential buyer to perform a contract to purchase or lease the property or to make a mortgage loan using the property as security

Question 15

What is a policy not assignable?

Answer 15

The owner’s (fee) policy is not assignable, so a new policy must be purchased each time the property changes hands. The feed paid for an owner’s policy is a one-time fee, paid when the policy is issued

Question 16

What is a leasehold estate?

Answer 16

is a legal term for a property rental or lease. It does not grant ownership but grants the lessee, or tenant, certain rights to use the property for a specified amount of time, in exchange for a specified payment made to the lessor, or owner/landlord

Question 17

What is a land contract?

Answer 17

is a binding legal document used in transferring ownership of vacant land between two parties. Whether negotiating residential or commercial land, the parties can utilize this contract to stipulate the agreed-upon sale price as well as any applicable financial contingencies.

Question 18

What is subrogation?

Answer 18

the right to take legal action against a third party responsible for a loss to an insured for which a claim has been paid. It means that an insurer who has settled a claim may then “step into the shoes” of the insured and try to recover what it has paid from anyone who has contributed towards, or caused, the loss.

Question 19

What is ALTA?

Answer 19

The American Land Title Association

Question 20

What is an owner’s policy?

Answer 20

The primary assurance offered by the owner’s policy is that the title to the insured land is wholly in the name of the insured.

Question 21

What is an owner’s policy?

Answer 21

The primary assurance offered by the owner’s policy is that the title to the insured land is wholly in the name of the insured.

Question 22

What is a mortgage or loan policy?

Answer 22

The mortgage policy provides exclusive protection for lenders who take real estate as security for a loan. In such cases, this policy will insure the mortgagee’s security interest in the collateral property. Continues for the life of the mortgage, even if the mortgage is assigned to another lender