chapter continues

Question 1

Bargain and Sale Deed

Answer 1

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.

Question 2

Quitclaim Deed

Answer 2

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.

Question 3

Covenant of seizin

Answer 3

meaning that the grantor warrants they own the property and has the legal right to convey it.

Question 4

Covenant of quiet enjoyment

Answer 4

indicating that the grantee will have quiet possession of the property and will not be disturbed because the grantor had a defective title

Question 5

Covenant of further assurance

Answer 5

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)

Question 6

Covenant against encumbrances —

Answer 6

— states that the grantor warrants that the property is free of liens or encumbrances, except as specifically stated in the deed

Question 7

Covenant of warranty forever

Answer 7

the grantor’s promises have no expiration date

Question 8

Dedication

Answer 8

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.

Question 9

Testator

Answer 9

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.

Question 10

Intestate

Answer 10

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.

Question 11

WILL

Answer 11

BENEFICIARY
TITLE BY DEVISE
EXECUTOR

Question 12

NO WILL

Answer 12

TITLE BY DESCENT (DECEDENT)
LAWS OF DESCENT AND DISTRIBUTION
ADMINISTRATOR

Question 13

judicial process

Answer 13

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.

Question 14

Foreclosure

Answer 14

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.

Question 15

Deed in lieu of foreclosure

Answer 15

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.

Question 16

Redemption

Answer 16

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.

Question 17

In the event of a foreclosure

Answer 17

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.

Question 18

Short Sale

Answer 18

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.

Question 19

REO (Real Estate Owned)

Answer 19

) 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.

Question 20

RECORDING TITLE

Answer 20

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.

Question 21

Title

Answer 21

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.

Question 22

Marketable title

Answer 22

is a title that a reasonable buyer would accept as clear.

Question 23

Equitable title

Answer 23

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.

Question 24

title insurance policy

Answer 24

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.

Question 25

title insurance company

Answer 25

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.

Question 26

title insurance company

Answer 26

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.

Question 27

Encumbrance (Incumbrance)

Answer 27

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

Question 28

General Lien:

Answer 28

A lien on all the property of a debtor.

Question 29

Involuntary Lien

Answer 29

A lien imposed against property without consent of an owner.

Question 30

Judgment Lien

Answer 30

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.

Question 31

Lien:

Answer 31

A form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation.

Question 32

Mechanic’s Lien

Answer 32

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.

Question 33

Priority of Lien:

Answer 33

The order in which liens are given legal precedence or preference.

Question 34

Specific Lien:

Answer 34

: A lien that attaches to one specific property only

Question 35

Tax Lien

Answer 35

A lien imposed by law upon a property to secure the payment of taxes.

Question 36

Voluntary Lien:

Answer 36

Any lien placed on property with consent of, or as a result of, the voluntary act of the owner.

Question 37

title search

Answer 37

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.

Question 38

title company attorney

Answer 38

views the abstract and renders an opinion of title.

Question 39

title report

Answer 39

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.

Question 40

lender’s or mortgagee’s policy

Answer 40

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.

Question 41

State Board of Insurance

Answer 41

sets premiums in many states, including Texas.

Question 42

claim or encumbrance

Answer 42

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”.