Recordation, Title Insurance, & Settlement Flashcards
1
Q
Public Recording System - Keypoints
A
- state laws determine policies & procedures that regulate recording; also determine responsibility for organizing & maintaining recorded documents
- recording a document does not provide validity
2
Q
Recording Process
5 steps…
A
- Note date & time the doc is filed.
- Assign recording number.
- Copy doc into publlic record (photocopy/digital image).
- List doc in grantor & grantee indexes.
- Return original doc to indicated party.
3
Q
System Allowances
A
- allows users to post claims
- gives constructive notice
- establishes priority of interests (1st in time, 1st in right)
- grantee who does not record deed rishs having another claim title to property
- creates position for doc base on recording date & time
- allows users to search claims
- inspect property for actual notice & visible claims
- inspect public records for contructive notices (liens)
- buyer’s due diligene to inspect property and public records.
4
Q
Requirements for Recording
A
- Docs usually recorded:
- deeds
- mortgages/trust deeds
- contracts for deed
- easements
- long-term leases
- recorded docs should be executed (signed)
- some states require notarization/acknowledgement
- paying recording fee & transfer tax (refer to state law); typically paid when recording the deed
5
Q
Subordination
A
- clause in mortgage/deed or trust in which lender permits a subsequent mortgage to take/change position for priority.
- allows mortgage to maintain original position
- previous mortgage refinanced? secondary mortgage continues subordinate position
6
Q
Marketable Title and How to Determine
A
- ownership free from reasonable doubt; buyers goal is to obtain marketable title.
- to be marketable, must:
- disclose no serious defects
- not expose purchaser to litigation or threaten the quiet enjoyment of property
- convince purchaser they could sell or mortgage the property at a later time
- any questions of marketable title have to be raised before acceptance of the deed
7
Q
Title Search
Process & Purpose
A
- examiner reviews public records pertaining to property
- search is from the present to original source of title
- process used to establish chain of title (successive ownership documents linked together); seeking an unbroken chain
- title clouded if errors or missing documents
- seller will need to clear title to convey the property
- marketable title act will determine how far back the search needs to be conducted.
8
Q
Abstract of Title & Attorney’s Opinion of Title
A
- ABSTRACT: historical summary of recorded docs affecting title & created through title search
- seller expected to produce updated abstract
- buyer’s attorney examines and determines marketability
- attorney renders opinion of title after tracing chain of title
- shows current status of rights
- lists objections
- a.k.a. certificate of title
9
Q
Title Insurance
A
- contract that protects policyholder from losses arising from defects in the title; protects the insured from an event that occured before policy was issued.
- beset method for determining marketable title
10
Q
Title Insurance - Process
A
After examining the public records, title company will:
- issue title report (current condition of title) and commitment (execptions/defects/encumbrances not included in policy)
- buyer can offer objections prior to closing
11
Q
Standar Coverage Title Ins. Policy
A
- protects against all problems found after closing; excludes exceptions found before closing & listed in title report.
- covers matters of record including:
- errors in title examination
- errors in abstract
- errors in public record (misfiled documents)
- hidden defects (forgery, incompetency, misrespresented marital status, etc.)
12
Q
Extended Coverage Title Insurance Policy
A
- protects the same as standard policy does as well as problems not a matter of public record such as:
- parties in possession/adverse possession issues
- matter of survey (encroachments)
- gap period (time between issued commitment date & date deed is recorded)
13
Q
Types of Insurance Policies
A
- Owner’s Policy: protects owners/buyers & heirs while they hold interest
- cost based on sale price of property
- paid for by buyer/seller/party listed in contract
- coverage continues until property changes title
- Mortgagee’s Policy: protects mortgagee/lender
- coverage base on loan amount
- often paid by buyer, but seller could pay if in contract
- coverage diminishes with each payment and ceases to exist when loan is satisfied
14
Q
Suit to Quiet Title
A
- court hearing to determine ownership, recognize valid claims, & quiet invalid claims.
- used to clear title & est. ownership under adverse possession
- lis pendens is filed & all parties must present evidence of the claim in court
- coourt hears & judge claims
- once court order is recorded, the cloud on the title is cleared
15
Q
Enivronmental Issues
RE Agent’s Role & Key Points
A
- Fall under EPA
- RE should know:
- issues common to area
- signs of contamination
- inform & suggest investigation into any EI
- Considered material facts - must disclose
- If broker/agent suspects, must be disclosed
- Broker/agent should suggest inspection, not inspector
- Properties w/high contamination levels may need cleaning before selling can take place
