chapter continues Flashcards
Bargain and Sale Deed
The distinguishing feature of this type of deed is that it has no warranties. Essentially it gives no protection to the grantee (buyer/receiver of title). This type of deed sometimes is used in foreclosure and tax sales.
Quitclaim Deed
are most often used for transferring property between family members or to cure a defect on the title, such as a misspelling of a name. Although they are relatively common, they are generally used in transactions where the parties know each other and are therefore more likely to accept the risks associated with the lack of buyer protection.
Covenant of seizin
meaning that the grantor warrants they own the property and has the legal right to convey it.
Covenant of quiet enjoyment
indicating that the grantee will have quiet possession of the property and will not be disturbed because the grantor had a defective title
Covenant of further assurance
where the grantor promises to deliver any document necessary to make the title good needed to ensure title is transferred to the grantee (buyer/receiver of title)
Covenant against encumbrances —
— states that the grantor warrants that the property is free of liens or encumbrances, except as specifically stated in the deed
Covenant of warranty forever
the grantor’s promises have no expiration date
Dedication
s when one dedicates a property, or essentially gives it up voluntarily to the government. An example is a developer giving up streets in a subdivision.
Testator
is a party who makes a will. One who has a valid will is testate. The person named in the will to settle the estate is called the executor. Inheritance by will gives Title by Devise. The property is the devise and the heir is the devisee.
Intestate
is not having made a will before one dies. The court will appoint an administrator to settle the estate of an intestate person. The heirs will inherit real property according to the Laws of Descent and will have Title by Descent.
WILL
BENEFICIARY
TITLE BY DEVISE
EXECUTOR
NO WILL
TITLE BY DESCENT (DECEDENT)
LAWS OF DESCENT AND DISTRIBUTION
ADMINISTRATOR
judicial process
to prove or confirm a will, or to settle the estate of a party who dies intestate is called probate. Title to real property passes at probate and that title transfer is final in 30 days.
Foreclosure
is the legal process instituted by a trustee, lienholder or creditor, after a debtor’s default on his or her payments. In other words, the lender begins the foreclosure. Any excess money left over from the forced sale is given to the debtor (owner/borrower). In the event of a shortage, the lender may sue the borrower for a Deficiency Judgment.
Deed in lieu of foreclosure
is an alternative to foreclosure. This is sometimes called “friendly foreclosure” or “voluntary deed.” The lender accepts a deed from the borrower, in “lieu” of foreclosing. The lender must also accept any junior liens on the property. This would be the fastest way for the lender to get title to the property.
Redemption
At any time up to the moment of the foreclosure, the borrower has the right to step in and pay what is owed and reclaim property forfeited due to mortgage default. This is his or her equity of redemption or equitable redemption. A lender would almost always prefer equity of redemption to deed in lieu of foreclosure.
In the event of a foreclosure
the lender must send the notice of foreclosure by certified mail 21 days before the foreclosure sale. There is no requirement that the borrower receive the notice, only that the lender sends it. The notice of foreclosure must be posted at the county courthouse and filed in the County Clerk’s office. In Texas, foreclosure sales are held on the first Tuesday of the month.
Short Sale
A short sale is a home that is available at a purchase price that is less than the amount owed by its current owner. The transaction benefits the bank by allowing it to avoid repossessing the home in foreclosure, which is expensive and time-consuming. The seller avoids the credit hit that comes with foreclosure and bankruptcy. The amount of debt forgiven may be considered income to the seller and taxable.
REO (Real Estate Owned)
) is property owned by a lender, such as a bank, that has not been successfully sold at a foreclosure auction. REO properties can include detached houses, condominiums, townhomes, and land. A lender—often a bank or quasi-governmental entity such as Fannie Mae or Freddie Mac—takes ownership of a foreclosed property when no bidder offers the amount it seeks to cover the loan.
RECORDING TITLE
Recording is not a requirement of a valid deed.
Recording gives constructive notice of ownership. This is notice to the world and protects against a fraudulent sale. Taking possession of property also gives constructive notice of ownership. A recording is always done in the county where the property is located.
A document must be acknowledged before it can be recorded. It must also be in English.
An acknowledgment is a declaration to a notary authorized to take oaths that the signature is a free and voluntary act. An acknowledgment verifies the signature.
Title
is both the ownership of something and the legal evidence of that ownership — a deed. Types of real estate title include clear or good title, marketable title, and equitable title. Clear or good title can be transferred to another.
Marketable title
is a title that a reasonable buyer would accept as clear.
Equitable title
is an interest created by a legal document, such as that held by a buyer with a signed sales contract, who has not yet gone to closing. The buyer has an equitable estate, or equitable title.
title insurance policy
agrees to compensate or reimburse the insured against any losses sustained as a result of defects in the title, other than those exceptions listed in the policy. A standard title policy will not provide protection for a survey or boundary problems. Additional coverage can be purchased for these issues.
title insurance company
will defend the title at its own expense, as well as pay any claims against the property if the title proves to be defective. Title insurance will not pay for defects known to the buyer prior to the policy being issued.
Title insurance must compensate owners for defects missed by the title company in its search process.
title insurance company
Premiums are paid one time. A new policy must be issued each time the property changes ownership, or is refinanced.
Title policies may contain a subrogation clause. This clause allows the title company to assume the rights of a buyer with respect to any claim against a seller if the title company has made payments to that buyer to satisfy that claim.
Unlike other types of insurance, protection is for the past, not the future.
Encumbrance (Incumbrance)
A claim, lien, charge, or liability attached to and binding real property. Any right to, or interest in, land which may exist in one other than the owner, but which will not prevent the transfer of fee title
General Lien:
A lien on all the property of a debtor.
Involuntary Lien
A lien imposed against property without consent of an owner.
Judgment Lien
A legal claim on all of the property of a judgment debtor which enables the judgment creditor to have the property sold for payment of the amount of the judgment.
Lien:
A form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation.
Mechanic’s Lien
A lien created by statute which exists against real property in favor of persons who have performed work or furnished materials for the improvement of the real property.
Priority of Lien:
The order in which liens are given legal precedence or preference.
Specific Lien:
: A lien that attaches to one specific property only
Tax Lien
A lien imposed by law upon a property to secure the payment of taxes.
Voluntary Lien:
Any lien placed on property with consent of, or as a result of, the voluntary act of the owner.
title search
is done. This is an examination of public records to compile an abstract of title. An abstract is a complete history of a title. Included in the abstract is a chain of title - a list of all owners from the first until today.
title company attorney
views the abstract and renders an opinion of title.
title report
or commitment (snapshot of title at the present time) is prepared. This obligates the title insurance company to issue a title policy when any curative requirements have been met. Payment of premiums will result in the policy being issued. The owner’s policy will protect the buyer up to the purchase price.
lender’s or mortgagee’s policy
will protect the lender up to the outstanding loan balance. (The lender’s coverage declines as the debt is satisfied.) The policy is received at closing.
State Board of Insurance
sets premiums in many states, including Texas.
claim or encumbrance
that may superficially injure the title to a property or cast doubt on the title’s validity is called a “cloud on the title”. Usually, property cannot be conveyed (transferred to another) as long as the cloud exists. A quitclaim deed can sometimes be used to fix the problem. If no one is available to sign a quitclaim, then a court procedure to cure or quiet the cloud can be used. This is called an “action to quiet title”.
