Estates, Transfers and Titles: Title Issues Flashcards
What are the three main forms of ownership?
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
What three types of co-ownership does Texas recognize?
Tenancy in common
Joint tenancy
Community property
What is the most common form of ownership among persons who are not married?
Tenancy in common
What is the definition of community property in Texas?
Community property consists of all other property earned or acquired by either party during the marriage.
Where must documents regarding interests in property be recorded?
In the office of the county clerk in the county in which the property is located
What is constructive notice?
Constructive notice, or legal notice, is knowledge of a fact that a person could have or should have obtained.
Define the term marketable title.
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.
What is the chain of title?
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.
What does a title search reveal?
The legal description of the property
The owners of record
Any outstanding liens or encumbrances on the property
Who needs title insurance and why?
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.
How long do loan policies remain in effect?
Loan policies remain in effect until the loan is repaid.
List three items not covered by a title insurance policy. (See screen 22 for other correct answers.)
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.
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:
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
Tenancy in Common
also known as the estate in common, is the most common form of co-ownership when the owners are not married.
Tenancy in common characteristics
Two or more owners Identical rights Interests individually owned Electable ownership shares No survivorship No unity of time
Joint Tenancy
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.
The defining characteristics and requirements of joint tenancy are:
Unity of ownership
Equal ownership
Transfer of interest
Survivorship
Separate property
belongs to one spouse; community property belongs to both spouses equally.
Community property
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.
public records
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.
Section 12.001(b) of the Texas Property Code
“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.”
Constructive notice
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.
Actual notice
A person who has received actual notice has actual knowledge of something. Receiving actual notice means learning of something through direct experience or communication.
Torrens System
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.
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. 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.
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:
The legal description of the property
The owners of record
Any outstanding liens or encumbrances on the property
The two forms of title evidence for obtaining assurance that the title is good are:
Abstract of title and attorney’s opinion (abstract and opinion)
Title insurance
abstract and opinion
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.
Abstractor
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.
Title Insurance
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.
Loan policy
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.
owner’s policy
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.
extended coverage policy
insures against many of the items excluded in the standard policy. Lenders require their mortgagee polices to be extended coverage policies.
