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Question 1

What are the different types of recording indexes?

Answer 1

– Tract index

– grantor – grantee index

Question 2

What do recording indexes do?

Answer 2

They are systems that name the parties, date, book or page number of the full copy, and a brief description of the land. A searcher finds the book and looks at the actual instrument.

Question 3

What is a tract index?

Answer 3

Separate pages in the index book for each tract of land and these pages have the history of the tract’s title back to the original conveyance from the sovereign. Each page has a chronological list of every conveyance ever made for that piece of land

Question 4

What is more common, a tract index, or a grantor/grantee index?

Answer 4

Grantor – grantee index

Question 5

Which type of recording index is more efficient and effective?

Answer 5

A tract index

Question 6

How does a grantor – grantee index work?

Answer 6

This is based on the parties’ names with two separate alphabetical indexes.

The first has the names of GRANTORS and the other has the names of GRANTEES. A searcher must look for the name of the current owner in the grantee index and then work backwards to find the previous grantor, repeating until finding the root or grant from the sovereign.

Then he looks at prior owners in the grantor index to see if they made adverse conveyances outside the chain of title. Then he looks at the actual deed to be sure it is proper. Then he checks public records like court dockets, probate indexes, and tax assessment records

Question 7

What are some complications that can come up when using the grantor – grantee index?

Answer 7

Nicknames, married names, middle names, legally changed names, title coming from a will/trust/divorce/adverse possession/source that would require looking at other places than the index, etc.

Question 8

What are other places that you might find a recorded document besides an index such that it would still be considered to be within the chain of title?

Answer 8

Liens, court judgments, condemning bodies, mechanics’ liens, etc.

Question 9

What index should you always assume is being used to record title if the fact pattern does not say otherwise?

Answer 9

A grantor – grantee index

Question 10

What does it mean to have inquiry notice of something?

Answer 10

You don’t actually know of a prior conveyance, but you get information that would lead a reasonable person to inquire further. This requires that you make a reasonable investigation.

• If you INQUIRE and learn the information, that becomes actual notice.
• If you DON’T INQUIRE, you are held to the knowledge that an investigation would have revealed.

It isn’t enough to just inquire of the seller, because he has the strongest incentive to hide things. Essentially this requires sufficient investigation

Question 11

If you are planning to buy a property that has a current tenant on it, what does the majority require you do?

Answer 11

You must inquire of any option to purchase, about lease extension, or other rights of the tenant.

Question 12

What is required in order for possession of land to put a purchaser on notice?

Answer 12

The possession must be open, visible, exclusive, and unambiguous.

Structures can give notice, including things like signs or driveways

Question 13

If a recorded document in the chain of title refers to unrecorded ones, what does that do?

Answer 13

That gives the person notice of the other unrecorded documents

Question 14

What is constructive notice?

Answer 14

This comes from the recording statutes. You are charged with notice of:

– anything that is apparent from a visual inspection of the property and/or interrogation of the possessors
– any information in the public records. If you don’t make a reasonable inquiry into this, the law imputes that knowledge to you because you should have searched the public records before doing the transaction
– this only applies when the document is in the chain of title, and anything recorded outside of that is treated as unrecorded, although the majority position is that as long as it is filed in the recording office, even if done improperly, that gives constructive notice. The modern trend says that you only have constructive notice of records that a reasonably diligent person would discover upon searching

Question 15

What are security interests?

Answer 15

Mortgages, deeds of trust, and installment land contracts

Question 16

What is a mortgage?

Answer 16

Conveyance or retention of an interest in real property as security for the performance of an obligation or debt. If a loan is secured by a mortgage, and not paid, the lender can recover the balance by selling the land subject to the mortgage and using the proceeds to repay the loan.

A mortgage is essentially collateral or security for a loan, so that the mortgagee can sell the property to make up the debt if the mortgagor defaults

Question 17

When you transfer a mortgage, you are essentially transferring what?

Answer 17

An interest in land, so the SOF is always involved

Question 18

What are the two documents that are involved in a mortgage?

Answer 18

– Mortgage: this acknowledges the existence of the debt
– note: this indicates who will be paid on the debt and a written promise by the borrower to pay the lender the agreed amount

Question 19

If a mortgagor defaults on the mortgage, what happens?

Answer 19

The mortgagee must have a judicial foreclosure sale

Question 20

What is the difference between taking property “subject to a mortgage”and taking it “assuming the mortgage“?

Answer 20

• subject to: not personally liable for debt

– assuming: personally liable for debt

Question 21

What does it mean to take property “subject to a mortgage“?

Answer 21

The person is not personally liable for the debt that the mortgage secures. If there’s a default on the mortgage, the property can be foreclosed to satisfy the debt, but the person owning the property cannot be forced to pay the debt.

Question 22

What does it mean to take property “assuming the mortgage“?

Answer 22

The person that takes the property is personally liable for the debt. He promises in a separate writing to pay off the mortgage

Question 23

How do courts often treat sale and lease-back issues?

Answer 23

This happens when someone gives another person the deed to his property for a certain amount and then agrees to something like a 20 year lease on the property where he essentially rents it (the prop he used to own) for a certain amount per year.

Courts often called this a mortgage with rent substituting for interest. This is most common when the agreement includes an option to re-purchase at a very low price. If the court decides it is a mortgage, the person that has the deed cannot evict the other one, but must foreclose if there is a default

Question 24

What is collateral?

Answer 24

It essentially means the security that you put up in exchange for a loan of money. The title is in your name, but whoever loaned you the money holds the title because they have a lien on it.

You sign a promissory note that is a contract with that person that they will give you the money and you get the item, and you will repay every month for a certain period of time. Once you pay off the money, the lender releases the lien and gives you title. If you do not pay, they can repossess the item and sell it

Question 25

What is a disguised mortgage?

Answer 25

Sometimes a mortgage is disguised as a sale. It can be smart to argue that the sale is really a mortgage when you want the result to be foreclosure

Question 26

What are situations that you should argue that there is a disguised mortgage?

Answer 26

When a land owner sells property for cash and then leases it back for a long period of time. If no rational person would have sold property at the claimed sale price, it is likely that a mortgage was intended

Question 27

What does usurious mean?

Answer 27

Excessively high or above the legal limit interest rates

Question 28

What is the California Usery cap?

Answer 28

12%. Anything at 20% or so is definitely usurious