N. Forms of Ownership, Trasfer, and Recording of Title Flashcards
Martin placed all of his real estate investments in a trust, and the proceeds are distributed through the trust to his son Nathan. Martin still manages the properties indirectly, and Nathan currently benefits as he’s past the required beneficiary age of 18. What type of trust is this?
A. Indirect trust
B. Living trust
C. Probate trust
D. Testamentary trust
B. Living trust
First determine who the parties are to the trust, and then determine when the trust was created relative to the trustor’s current status. In this scenario, Martin is the trustor—the person who created the trust. The beneficiary is his son Nathan. Was the trust created while Martin was still alive, or was it created when he passed with specific instructions in his will? Martin created the trust while still alive, and in fact he is alive now, so this can’t be a testamentary trust (which is created after the trustor is deceased). Option D is incorrect. Testamentary trusts must go through probate, but there is no such thing as a probate trust. Option C is incorrect. The type of trust which is created when the trustor is alive is called a living trust
Sebastian owns a country house and vacations there every summer and on holiday weekends. As much as he’d like to will it to his niece when he passes, his ownership of the house ends when he dies. What type of estate does Sebastian own?
A. Fee simple estate
B. Free leasehold estate
C. Life estate
D. Remainder estate
C. Life estate
Sebastian has a fee simple estate, but it’s a very special kind of fee simple estate that ends when the owner dies. It’s only applicable while the owner is alive. And that’s your hint right there: it’s only good during Sebastian’s lifetime, which makes this a life estate.
Malcolm loves his apartment, even though he’s rarely there. His job in international development has him on the road for months at a time. He doesn’t have to worry about missing out on his lease renewal though, because he has a(n) ________.
A. Estate at will
B. Estate for years
C. Freehold estate
D. Periodic estate
D. Periodic estate
We know that the correct answer isn’t option C, a freehold estate, because Malcolm is leasing his apartment and doesn’t own it. The three remaining options are all types of leasehold estates, so it’s a matter of determining which one renews automatically. Options B and D both sound like they could be correct, so you just have to remember the difference between them. An estate for years may be for years—or months or weeks—but it always has a fixed termination date. Option B isn’t the correct answer. A periodic estate, however, is automatically renewed at the end of the specified lease period, whatever that may be.
Jackie was sued in civil court by one of her creditors. As a result of the judgment against her, her house, car, and art collection are all subject to sale in order to pay the creditor. What type of lien is this?
A. General
B. Special assessment
C. Vendor’s
D. Voluntary
A. General
There are two different ways in which liens can be classified. The first is as a voluntary lien or an involuntary one. Voluntary liens are ones in which the property owner agrees to have the lien placed—as in taking out a mortgage. Involuntary liens are placed without the consent of the property owner. The other way in which liens can be classified are as specific or general. Specific liens attach to a specific piece of property, while general liens attach to all of an individual’s real and personal property. In Jackie’s case, she did not agree to the judgment, so this isn’t a voluntary lien. Answer D isn’t correct. A vendor’s lien doesn’t apply here, because that term refers only to liens placed by contractors who provided goods or services to the property. A special assessment is levied by a taxing body, so option B isn’t correct. That leaves option A, a general lien. This is the type of lien against Jackie’s property, as it’s against her real AND her personal property.
LaTonya’s aunt left her a bungalow on the outskirts of the city. For many years, it was the place for family holiday gatherings, and LaTonya’s sister was even married there. That’s why her family is so upset to learn that she plans to sell the bungalow as soon as she gets it cleaned out. Which real property right allows her to sell the property?
A. Control
B. Disposition
C. Exclusion
D. Possession
B. Disposition
This question requires you to distinguish between various ownership rights, which are all part of the real estate bundle of rights. Let’s look at each one in turn. Control is the right to manage the property. Disposition is the right to convey the property. Exclusion is the right to decide who may or may not access the property. Possession is the right to occupy the property. In this scenario LaTonya is going to sell the property, which is a conveyance.
Meg is considering a move to a foreign country and wants to deed her property to her son, Christian, who’s 16. Which of these situations must occur to make this transfer legal?
A. Christian must agree to the transfer and sign the deed.
B. Meg must wait until Christian has reached the age of majority.
C. Christian must provide monetary compensation to Meg.
D. Meg must sign the deed and have her signature acknowledged.
D. Meg must sign the deed and have her signature acknowledged.
As the grantee, Christian doesn’t have to sign the deed, and he doesn’t have to be legally competent or of legal age. The property can be conveyed only if some consideration is in place, but it doesn’t have to have a monetary value.
Which of these guarantees is offered by a general warranty deed but NOT a special warranty deed?
A. The seller owns the property (title).
B. The seller is legally allowed to sell the property.
C. The property is free of debt or other claims taken on during the grantor’s period of ownership.
D. The seller will defend against all claims against the property’s title.
D. The seller will defend against all claims against the property’s title.
A special warranty deed usually carries just three warranties. Both a special warranty deed and a general warranty deed guarantee that the grantor owns the property, so we know option A isn’t correct. Both deed types also guarantee that the grantor is legally permitted to sell the property, so option B is incorrect. Both deed types state that the property is free of debts or encumbrances acquired during the grantor’s ownership period except those noted on the deed; of course, the general warranty deed goes beyond that and warrants that there are no encumbrances (no matter when acquired) other than those identified in public records or the deed itself. Thus, option C is out. The special warranty deed doesn’t warrant that the seller (grantor) will defend against any claims made on the title
Stu is buying Freddie’s property. What must occur for the transfer of title to take place?
A. Freddie must deliver the deed to Stu.
B. Stu must sign the deed.
C. Stu must convey the deed.
D. Freddie and Stu must sign the deed.
A. Freddie must deliver the deed to Stu.
The grantor must sign the deed, but the grantee isn’t required to sign. This eliminates options B and D. The grantor (seller) conveys the deed, so option C is out. Option A is the correct answer, because the grantor (Freddie) must deliver the deed to the grantee (Stu).
Which option is true if a deed is not recorded after closing?
A. The title never transfers to the buyer.
B. The legal ownership of the property can be challenged.
C. The entire closing is void.
D. The buyer must pay a fine to the seller.
B. The legal ownership of the property can be challenged.
If a deed isn’t recorded after closing, legal ownership of the property can be challenged. Recording isn’t required, but it’s difficult for a property owner to prove ownership without public recordation of the deed.
What’s the purpose of a quiet title suit?
A. Compel the seller to provide title insurance.
B. Pay all debts and liens against a title.
C. Remove any claims against a property’s title.
D. Compel the lender to finance a cloudy title.
C. Remove any claims against a property’s title.
The purchase agreement usually states who is responsible for title insurance; if the seller is obligated to provide the policy under purchase agreement terms, funds for that will normally be deducted from the seller’s proceeds at closing, so option A is out. It’s a similar situation for option B: In a property transfer, the seller will be required to pay all title-related debts and liens at or before closing, so no suit is necessary. Lenders can’t be forced to write a loan on a property without a clear title, so option D is out, leaving us with option C: A quiet title suit seeks to remove any claims against a property’s title by clearing up any disputes and making sure recording errors are resolved. If there are multiple ownership claims on the property, the suit will establish ownership.
