Real Estate national CH7

Question 1

Depending on the jurisdiction in which the property is located, the public records are maintained by?

Answer 1

1. Recorders of deeds.
2. County Clerks
3. County Treasurers
4. City Clerks
5. Collectors
6. Clerks of Court

Question 2

D: Constructive Notice

Answer 2

is the legal presumption that information has been obtained by an individual through due diligence.

A document placed in the public record serves as notice to the world of an individual’s right or interest in the property.

Physical possession of property also serves as constructive notice of the right of the person in possession.

Because the information or evidence is readily available to the world, a prospective purchaser or lender is responsible for discovering the interest and is presumed to have done so.

Question 3

D: Actual Notice

Answer 3

means not only that information of interest in the property is available but also that someone is actually aware of it.

An individual who has searched the public records or inspected the property has actual notice of what is contained in the records or obvious from the property inspection.

If it can be proved that an individual has had actual notice of a property right, that person cannot use a lack of constructive notice (such as an unrecorded deed) to justify a claim.

Question 4

D: Recording

Answer 4

is the act of placing documents in the public record.

The specific rules for recording documents are a matter of state law.

Although the details may vary, all recording acts essentially provide that any written document that affects any estate, right, title, or interest in land must be recorded in the county (or, in some states, the town) where the land is located to serve as a public notice.

This way, anyone interested in the title to a parcel of property will know where to look to discover the various interests of all other parties.

Recording acts also generally give legal priority to those interests recorded first—the first in time, first in right or first come, first served principle.

There are exceptions to this principle, such as liens for property taxes, special assessments, and delinquent amounts owed to the Internal Revenue Service.

Question 5

To be eligible for recording

Answer 5

A document must be drawn and executed according to state law.

Question 6

D: Priority

Answer 6

The order of position or time. The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens.

Question 7

D: Chain of Title

Answer 7

is the record of a property’s ownership. Beginning with the earliest owner, a title may pass to many individuals.

Question 8

D: Action to quiet title

Answer 8

A court action that establishes ownership when ownership cannot be traced through an unbroken chain of title.

Question 9

D: Title Search

Answer 9

is an examination of the public records to determine whether any defects exist in the chain of title.

The time beyond which the title must be searched can be limited in states that have adopted the Marketable Title Act created by the Uniform Law Commission.

Question 10

D: Marketable title Act

Answer 10

Recognize that a review of the same records from, say, the 1800s, over and over again for each conveyance is not a productive use of time or money.

This law also extinguishes certain interests and cures certain defects arising before the root of the title is found—the conveyance that establishes the source of the chain of title.

Question 11

D: Abstract of Title

Answer 11

is a summary report of what the title search found in the public records.

The report begins with the original grant (or root) and then provides a chronological list of recorded instruments.

Question 12

D: Abstractor

Answer 12

The person who prepares a full abstract of title.

The abstractor searches all the public records and then summarizes the various events and proceedings that affected the title throughout its history.

Question 13

D: Marketable title

Answer 13

that is, title that is acceptable to a reasonably prudent person and which will not subject the buyer to litigation.

Question 14

The be marketable, a title must ?

Answer 14

1. Disclose no serious defects and not depend on doubtful questions of law or fact to prove its validity.
2. Not expose the purchaser to the hazard of litigation or threaten the quiet enjoyment of the property.
3. Convince a reasonably well-informed and prudent purchaser, acting on business principles and with knowledge of the facts and their legal significance, that the purchaser could sell or mortgage the property at a later time.

Question 15

questions of marketable title must be raised by a

Answer 15

buyer before acceptance of the deed.

Question 16

True or False:

The legal presumption that information may be obtained by an individual through due diligence is called constructive notice.

Answer 16

True

Question 17

D: Proof of Ownership

Answer 17

Proof of ownership is evidence that the title is marketable.

A certificate of title, title insurance, or a Torrens certificate is commonly used to prove ownership.

Question 18

D: Certificate of Title

Answer 18

Is a statement of opinion of the title’s status on the date the certificate is issued.

A certificate of title is not a guarantee of ownership.

Rather, it certifies the condition of the title based on an examination of the public records—a title search.

The certificate may be prepared by a title company, licensed abstractor, or attorney.

An owner, mortgage lender, or buyer may request the certificate.

Unrecorded liens or rights of parties in possession cannot be discovered by a search of the public records.

A certificate offers no defense against these defects because they are unknown.

The person who prepares the certificate is liable only for negligence in preparing the certificate.

Question 19

D: Attorney’s Opinion Title

Answer 19

An abstract of title that an attorney has examined and has certified to be, in the attorney’s opinion, an accurate statement of the facts concerning the property’s ownership.

Question 20

D: Title Insurance

Answer 20

is a contract under which the policyholder is protected from losses arising from defects in the title.

A title insurance company determines whether the title is insurable, based on a review of the public records. If so, a policy is issued.

Unlike other insurance policies that insure against future losses, title insurance protects the insured from an event that occurred before the policy was issued.

Title insurance is considered the best defense of title: the title insurance company will defend any lawsuit based on an insurable defect and pay claims if the title proves to be defective.

Question 21

D: Standard Coverage of Title insurance

Answer 21

1. Defects found in public records.
2. Forged Documents
3. Incompetent Grantors
4. Incorrect marital Statements
5. Improperly Delivered Deeds

Question 22

Extended Coverage for title Insurance

Answer 22

1. Defects found in public records.
2. Forged Documents
3. Incompetent Grantors
4. Incorrect marital Statements
5. Improperly Delivered Deeds
6. Property Inspection, including unrecorded rights of persons in possession
7. Examination Of Survey
8. Unrecorded Liens not known by the policyholder

Question 23

What is not covered by Title Insurance

Answer 23

1. Defects and liens listed in the policy.
2. Defects known to the buyer
3. Changes in land use brought about by zoning ordinances

Question 24

D: Torrens System

Answer 24

A method of evidencing title by registration with the proper public authority, generally called the registrar ; named for its founder, Sir Robert Torrens.

Question 25

Ture or False and Why?:

The title insurance policy generally identifies certain uninsurable losses called exclusions, including those resulting from issues such as zoning.

Answer 25

true.

The type of title insurance policy will define the coverage included, but there will always be exclusions from coverage.

Question 26

True or False and Why?

A written document that affects any estate, right, title, or interest in land must be recorded in the county in which the property owner resides.

Answer 26

False

A written document that affects any estate, right, title, or interest in land must be recorded in the county (or counties) or, in some states, town in which the property is located.

Question 27

True or False and Why?

In a typical title search, the chain of title is examined, beginning with the earliest records of ownership and proceeding forward up to the present owner.

Answer 27

False

In a typical title search, the chain of title is examined beginning with the present owner and tracing backwards to the earliest records of ownership or a definite period of years, depending on state law.

Question 28

True or False and Why?

An extended coverage title insurance policy protects a homeowner against the rights of parties in possession and unrecorded liens.

Answer 28

True

Extended coverage as provided by an American Land Title Association (ALTA) policy includes the protection of a standard policy plus additional protections.

Question 29

All of these are acceptable evidence of an owner’s title EXCEPT

A. A Certificate of title.

B. An abstract of title and attorney’s opinion.

c. A recorded deed.

D. A title insurance policy

Answer 29

C

Question 30

All of the following would be revealed by a title search EXCEPT?

A: Mechanic’s Lien

B: Property Taxes

C: Encroachments

D: Mortgage

Answer 30

C: Encroachments

Question 31

Documents referred to as title evidence include?

A: General Warranty Deeds

B: Security Agreements

C: Policies of title insurance

D: Special Warranty Deeds

Answer 31

C: Policies of title insurance

Deeds are never considered title evidence. Policies of title insurance provide the best title evidence.

Question 32

A buyer bought a house, received a deed, and moved into the residence but neglected to record the document. One week later, the seller died and the heirs in another city, unaware that the property had been sold, conveyed title to a relative, who recorded the deed. Who owns the property?

A: The Seller’s Heirs

B: The relative

C: Both the buyer and the relative

D: The Buyer

Answer 32

D: The Buyer

Constructive notice can be given in either or both of two ways: taking possession and/or recording one’s deed.

The buyer took possession.

The relative who purchased the property from the seller’s heirs was responsible for both checking the public records (which still showed the seller as owner because the buyer had not yet recorded the purchase) and visiting the property to inquire into the rights of any parties in possession.

The relative-purchaser’s investigation would have revealed that the seller’s heirs did not have the right to sell the property in question.

Question 33

A lender making a loan secured by a mortgage will probably require the borrower to purchase?

A. An owner’s title insurance policy.

B. A mortgagee’s title insurance policy.

C. Mortgage Insurance

D. A mortgagor’s title insurance policy.

Answer 33

B. Mortgagee’s title insurance policy.

To protect their interests, lenders generally require a borrower to purchase a mortgagee’s title insurance policy (also called a lender’s policy or a loan policy).

Question 34

Which of the following is NOT proof of ownership?

A. Deed

B. Title Insurance

C. Certificate of Title

D. Torrens Title

Answer 34

A. Deed

A warranty deed contains no proof of the condition of the grantor’s title at the time of the conveyance.

Question 35

Which of the following BEST describes the chain of title?

A. It is a history of all documents and legal proceedings affecting a specific parcel of land.

B. It is an instrument or document that protects the insured parties (subject to specific exceptions) against defects in the record of a property’s ownership.

C.It is the examination of the record and hidden risks such as forgeries, undisclosed heirs, errors in the public records, and so on.

D.It is the examination of the record and hidden risks such as forgeries, undisclosed heirs, errors in the public records, and so on.

Answer 35

A.
It is a history of all documents and legal proceedings affecting a specific parcel of land.

The answer is it is a history of all documents and legal proceedings affecting a specific parcel of land.

Chain of title is the entire history, or record, of recorded 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.

Question 36

Defects and liens listed in the title policy are included in the policy as?

A. Debits

B. Exclusions

C. Credits

D. Coverages

Answer 36

B. Exclusions

A title company will not cover against defects that appear in a title search. These are included in the policy as exclusions.

Question 37

How many title policies are typically issued at a closing?

A. None of these

B. Three

C. One

D. Two

Answer 37

D. Two

The owner’s policy is for the benefit of the owner (buyer), and the lender’s policy is for the benefit of the mortgage company.

Question 38

Documents referred to as title evidence include?

A. Security agreements

B. Policies of title insurance

C. General Warranty Deeds

D. Special Warranty Deeds

Answer 38

B. Policies of title insurance

Deeds are never considered title evidence. Policies of title insurance provide the best title evidence.

Question 39

Which of the following would NOT be acceptable evidence of ownership?

A. Deed to the current owner signed by the last seller.

B. Attorney’s Opinion

C. Abstract

D. Title Insurance Policy

Answer 39

A. Deed to the current owner signed by the last seller.

The existence of a deed to the current owner is not evidence that the owner actually received title.

The absence of any deed, however, would indicate that the owner probably does not have title.

A favorable attorney’s opinion based on examination of an abstract (the report of a title search) and a policy of title insurance are strong evidence of title held by the owner.

Question 40

The deed to a farm was made part of the public record, and the new owners proceeded to take possession of the property, living there and cultivating the acreage. The fact that the new owners live on the property serves as?

A. notice of the priority of the new owners to the rights of other claims to the property.

B. no notice of ownership because farm properties frequently are leased to others.

C. actual notice to the world of the rights of the new owners in the property.

D. constructive notice to the world of the rights of the new owners in the property.

Answer 40

B.no notice of ownership because farm properties frequently are leased to others.

The fact that someone occupies the property serves to alert other persons of a possible claim of ownership.

Question 41

Evidence of marketable title includes which of the following?

A. Trust Deed

B. Warranty Deed

C. Title Insurance Policy

D. Affidavit

Answer 41

C. Title Insurance Policy

Proof of ownership is evidence the title is marketable, and title insurance provides the best defense of title.

Question 42

Proof of ownership is?

A. Necessary only if there is a cloud on the title.

B. Evidence that title is marketable

C. Subjective and depends on what the buyer requires.

D. The deed from seller to buyer.

Answer 42

B. 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.

Question 43

Which of the following occurs under the Torrens system?

A. The torrens official performs exactly the same functions as the recorder of deeds.

B. The Original deed is mailed to the buyer after it have been registered

C. Title passes when the grantee’s application for registration has been approved and the real estate has been registered.

D. The registration of a title can be canceled by the owner at any time.

Answer 43

D. the registration of a title can be canceled by the owner at any time.