Estates, Transfers and Titles: Title Issues

Question 1

What are the three main forms of ownership?

Answer 1

In severalty – Held by only one owner
In co-ownership – Held by two or more people
In trust – Held by a third party for the benefit of someone else

Question 2

What three types of co-ownership does Texas recognize?

Answer 2

Tenancy in common
Joint tenancy
Community property

Question 3

What is the most common form of ownership among persons who are not married?

Answer 3

Tenancy in common

Question 4

What is the definition of community property in Texas?

Answer 4

Community property consists of all other property earned or acquired by either party during the marriage.

Question 5

Where must documents regarding interests in property be recorded?

Answer 5

In the office of the county clerk in the county in which the property is located

Question 6

What is constructive notice?

Answer 6

Constructive notice, or legal notice, is knowledge of a fact that a person could have or should have obtained.

Question 7

Define the term marketable title.

Answer 7

A marketable title is one that is so free of defects that the buyer is certain he or she will not have to defend the title.

Question 8

What is the chain of title?

Answer 8

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

Question 9

What does a title search reveal?

Answer 9

The legal description of the property
The owners of record
Any outstanding liens or encumbrances on the property

Question 10

Who needs title insurance and why?

Answer 10

Both the buyer and the lender need title insurance. Insurance for the buyer ensures a clear title and protects his or her investment. Insurance for the lender protects the lender’s interest in the property.

Question 11

How long do loan policies remain in effect?

Answer 11

Loan policies remain in effect until the loan is repaid.

Question 12

List three items not covered by a title insurance policy. (See screen 22 for other correct answers.)

Answer 12

Problems with the title that occur after the date the owner purchased the policy.
The penalties of the owner’s failure to pay for the property.
An unrecorded title defect that the owner knew about or allowed to occur.

Question 13

There are numerous ways of holding ownership of a freehold estate. It depends on how many parties share the ownership and how they share it. The property may be held:

Answer 13

In severalty – Held by only one owner
In co-ownership – Held by two or more people
In trust – Held by a third party for the benefit of someone else

Question 14

Tenancy in Common

Answer 14

also known as the estate in common, is the most common form of co-ownership when the owners are not married.

Question 15

Tenancy in common characteristics

Answer 15

Two or more owners
Identical rights
Interests individually owned
Electable ownership shares
No survivorship
No unity of time

Question 16

Joint Tenancy

Answer 16

wo or more persons collectively own a property as if they were a single person. Rights and interests are indivisible and equal. Joint tenancy relationship must be created by a written agreement in Texas.

Question 17

The defining characteristics and requirements of joint tenancy are:

Answer 17

Unity of ownership
Equal ownership
Transfer of interest
Survivorship

Question 18

Separate property

Answer 18

belongs to one spouse; community property belongs to both spouses equally.

Question 19

Community property

Answer 19

consists of all other property earned or acquired by either party during the marriage.
In Texas, most property acquired by either spouse during their marriage is considered community property.

Question 20

public records

Answer 20

Texas law requires officials to maintain public records, including those in land offices and in the offices of county clerks, surveyors, country assessors, treasurers, city clerks, and clerks involved with other courts of record. Officials must also maintain records that pertain to taxes, zoning ordinances, special assessments, and other similar records.

Question 21

Section 12.001(b) of the Texas Property Code

Answer 21

“An instrument conveying real property may not be recorded unless it is signed and acknowledged or sworn to by the grantor in the presence of two or more credible subscribing witnesses or acknowledged or sworn to before and certified by an officer authorized to take acknowledgements or oaths, as applicable.”

Question 22

Constructive notice

Answer 22

legal notice, is knowledge of a fact that a person could have or should have obtained. The foremost method of imparting constructive notice is by recordation of ownership documents in public records, specifically, title records.

Question 23

Actual notice

Answer 23

A person who has received actual notice has actual knowledge of something. Receiving actual notice means learning of something through direct experience or communication.

Question 24

Torrens System

Answer 24

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 25

Chain of title

Answer 25

refers to the succession of property owners of record dating back to the original grant of title from the state to a private party. If there is a missing link in the chronology of owners, or if there was a defective conveyance, the chain is said to be broken, resulting in a clouded title to the property.

Question 26

Before a lender will agree to lend money on a property, the lender will order a title search on the property. The title search reveals:

Answer 26

The legal description of the property
The owners of record
Any outstanding liens or encumbrances on the property

Question 27

The two forms of title evidence for obtaining assurance that the title is good are:

Answer 27

Abstract of title and attorney’s opinion (abstract and opinion)
Title insurance

Question 28

abstract and opinion

Answer 28

an historical summary of all consecutive grants, conveyances, wills, records and judicial proceedings that affect the title to a particular property. The abstract will also include a statement of the status of all recorded liens and encumbrances affecting the property.

Question 29

Abstractor

Answer 29

The person who prepares the abstract is called an abstractor. The abstractor searches documents that are recorded or registered with the county recorder, country registrar, circuit court and other official sources. The abstractor then summarizes the findings and arranges them in chronological order, beginning with the original grant of title.

Question 30

Title Insurance

Answer 30

combines the abstracting process with an insurance program. The insurance guarantees the validity and accuracy of the title search. The title insurance company warrants to “make good” any loss arising from a defect in the title or from any liens or encumbrances on the property.

Question 31

Loan policy

Answer 31

Most lending institutions won’t loan money to buy a house or other property unless the buyer purchases a loan policy. This policy will repay the balance of the mortgage if a claim against the property voids the title. A loan policy covers up to the amount of the principle on the loan.

Question 32

owner’s policy

Answer 32

insure property owners against the specific kinds of claims listed in the policy. When a person buys a house and purchases a mortgagee policy, a title company will automatically issue an owner policy unless the owner specifically rejects it in writing.

Question 33

extended coverage policy

Answer 33

insures against many of the items excluded in the standard policy. Lenders require their mortgagee polices to be extended coverage policies.