Public Records Notes Flashcards
Title Records Example. See Back.
Property owner A listed a house for sale. Buyer B purchased the property from seller A and received a deed. Buyer B did not record the deed but took possession of the property in June. In November, A sold the same property to buyer C who received a deed, which C promptly recorded. C never inspected the property to determine if someone was in possession of it. In this case, by taking possession of the property, B has the superior right to it even though B did not record the deed received from A.
Chain of Title Forgery Title Example. See Back.
There may be a forged deed in the chain of title, which means that no subsequent grantee, even though innocent of the forgery, acquired legal title. In an action to quiet title brought by an individual currently living on the property and claiming title many years after the forgery, the individual may claim the right of ownership by virtue of adverse possession. Legal title could be acquired by adverse possession even in the case of an invalid document in the chain of title if there were the necessary years of property occupancy (typically, a higher requirement if a forgery has occurred) accompanied by the “color of title” provided by what appeared to each successive owner to be a valid deed.
A client asks you to do a Title Search when you advise him not to do it himself. What should you tell your client?
A)
Suggest they perform the search together
B)
Say she’d be glad to help, as she knows what she’s looking for and he may not
C)
Say she is too busy to do it but knows her real estate assistant can do it
D)
Advise that a title company, attorney, or lender conduct the search
Explanation
The answer is advise that a title company, attorney, or lender conduct the search. Prospective buyers rarely search public records for evidence of title or encumbrances themselves. Instead, title companies, attorneys, and lenders conduct the searches. Real estate professionals should not perform title searches for their clients or customers, even if qualified to do so, because of conflict of interest concerns.
Match the definitions with the the correct type of notice.
Took physical possession
Searched public records
Gave information personally
Recorded documents
Inspected the property
Constructive notice:
Took physical possession
Actual notice:
Searched public records
Actual notice:
Gave information personally
Constructive notice:
Recorded documents
Actual notice:
Inspected the property
Public records are NOT maintained by the clerks of the court. T/F?
False.
The legal presumption that information may be obtained by an individual through due diligence is called constructive notice. T/F?
True.
Match the Following policies:
Standard
ALTA
Neither
A) Incompetent grantor
B) Rights of parties in possession of the property
C) Results of a survey
D) Unrecorded liens
E) Improperly delivered deeds
F) Incorrect marital statements
G) Information in public records
H) Defects known to the buyer
I) Zoning
J) Easements
K) Forged documents
Standard : A, E, F, G, K
ATLA : B, C, D,
Neither : H, I, J
The title insurance policy generally identifies certain uninsurable losses called exclusions, including those resulting from issues such as zoning. T/F?
True
A certificate of title provides a guarantee of ownership. T/F?
False. Not all certificates guarantee ownership.
Mortgagee title policies protect which parties against loss?
A)
Buyers and lenders
B)
Lenders
C)
Buyers
D)
Sellers
Explanation
The answer is lenders. A mortgagee title policy protects the mortgagee—the lender. An owner’s policy protects the owner, heirs, and devisees.
Constructive notice is a result of
A)
properly recording documents in the public record.
B)
giving someone information.
C)
unrecorded liens.
D)
real estate taxes and special liens.
Explanation
The answer is properly recording documents in the public record. Recording documents in the public record serves as constructive notice to the world of an individual’s rights or interest, as does the physical possession of the property.
Who is usually responsible for providing marketable title to the property?
A)
The buyer
B)
The seller
C)
The title company
D)
The mortgage company
Explanation
The answer is the seller. Most contracts clearly state that the seller is responsible for pro viding marketable title to the property.
Proof of ownership is
A)
necessary only if there is a cloud on the title.
B)
the deed from seller to buyer.
C)
evidence that title is marketable.
D)
subjective and depends on what the buyer requires.
Explanation
The answer is evidence that title is marketable. The grantee needs assurance that ownership is actually being acquired and that the title is marketable, before accepting a deed.
Which of the following would cause a cloud on title?
A)
A recorded lien that was paid off but not released
B)
Gap in the chain of title
C)
Missing the name of the grantor
D)
All of these
Explanation
The answer is all of these. In more serious cases, such as a missing name of the grantor or a gap in the chain of title, it may be necessary to file a suit to quiet title.
Properly recording documents in the public record provides what type of notice to the world of an individual’s rights or interest?
A)
Legal
B)
Constructive
C)
Effective
D)
Actual
Explanation
The answer is constructive. Constructive notice is the legal presumption that information may be obtained by an individual through due diligence. Properly recording documents in the public record serves as constructive notice to the world of an individual’s rights or interest, as does the physical possession of a property. Because the information or evidence is readily available to the world, a prospective purchaser or lender is responsible for discovering the interest.
Which of the following are traditionally covered by a standard title insurance policy?
A)
Unrecorded rights of persons in possession
B)
Improperly delivered deeds
C)
Changes in land use because of zoning ordinances
D)
Unrecorded liens not known to the policyholder
Explanation
The answer is improperly delivered deeds. The rights of persons in possession (prior to purchase) are not covered by the basic title insurance policy, but they are covered by extended coverage policies. Changes in land use related to zoning are not covered in any type of title insurance. Standard coverage will protect against improperly delivered deeds.
A property with encumbrances that will outlast the closing
A)
can be sold if a buyer agrees to take it subject to the encumbrances.
B)
can be sold only if title insurance is provided.
C)
cannot be sold.
D)
cannot have a deed recorded without a survey.
Explanation
The answer is can be sold if a buyer agrees to take it subject to the encumbrances. A buyer can agree to purchase property with existing encumbrances, such as a lien that the purchaser will assume.
Chain of title is MOST accurately defined as
A)
a report of the contents of the public record, including all legal proceedings, regarding a particular property.
B)
the examination of the record and hidden risks such as forgeries, undisclosed heirs, errors in the public records, and so on.
C)
the record of a property’s ownership.
D)
an instrument or document that protects the insured parties (subject to specific exceptions) against defects in the record of a property’s ownership.
Explanation
The answer is the record of a property’s ownership. Chain of title is the entire history, or record, of transactions affecting a property, while an abstract is a summary of relevant facts found when examining the history. Title insurance is used to protect against defects in the record of a property’s ownership and is issued only after a title examination, which evaluates the public records of the property.
Which of the following would create a cloud on title?
A)
An incorrect date
B)
All of these
C)
Misspelling of a grantor’s name
D)
A slight error in the legal description
Explanation
The answer is all of these. A cloud on title can be created by a misspelling of a grantor’s name, an incorrect date, or a slight error in the legal description.
When multiple persons claim ownership of property and each has a recorded deed, but no one occupies the property, the person who is awarded ownership is likely to be the one who
A)
has the earliest dated deed.
B)
brought a quiet title suit in court.
C)
has a receipt from the grantor of the deed.
D)
recorded the deed first.
Explanation
The answer is recorded the deed first. If there is no notice of ownership based on occupancy of the property, the person with the earliest recorded deed is likely to prevail.
A mortgagee received a title insurance policy on the property a buyer is pledging as security for the mortgage loan. Which of the following is TRUE?
A)
The policy is issued for the benefit of the buyer.
B)
The amount of coverage is commensurate with the loan amount.
C)
The amount of coverage increases as the borrower grows older.
D)
The policy guarantees that the buyer’s equity will be protected.
Explanation
The answer is the amount of coverage is commensurate with the loan amount. A lender’s policy is used for the benefit of the mortgagee. The amount of coverage depends on the amount of the mortgage loan and is decreased as the loan balance is reduced.
A title company will NOT cover against defects
A)
caused by incompetent grantors.
B)
resulting from an incorrect marital statement.
C)
caused by forged documents.
D)
that appear in a title search.
Explanation
The answer is that appear in a title search. A title company will not cover against defects that appear in a title search. Defects and liens listed in the title policy are included in the policy as exclusions.
All of the following would be considered evidence of marketable title EXCEPT
A)
a certificate of title by a real estate broker.
B)
an abstract of title with a legal opinion.
C)
a certificate of title by a real estate attorney.
D)
a title commitment or title insurance policy.
Explanation
The answer is a certificate of title by a real estate broker. A certificate of title may be prepared by a title company, licensed abstractor, or attorney, but not a real estate broker.
What is a marketable title?
A)
A title that is available to the entire market without any discrimination
B)
A title that is at market price
C)
A title for desirable property
D)
A title that has no defects that could carry over as a problem for the new owner at whatever time the new owner decides to sell the property.
Explanation
The answer is a title that has no defects that could carry over as a problem for the new owner at whatever time the new owner decides to sell the property. Most contracts clearly state that the seller is responsible for providing marketable title to the property. The term marketable means a title that has no defects that could carry over as a problem for the new owner at the time of a future sale.
