Title Insurance

Question 1

Title Insurance Terms

**Chain of Title and Abstract would reveal any gaps or clouds on title**

Chain of Title -

Complete history of the title to a property. includes all transfers of ownership, all liens and encumbrances recorded since original recorded source of title

Abstract of Title - Summary of chain of title

Subrogation or EXCHANGE OF RIGHT FOR MONEY the substitution of a third person in place of another in relation to a claim or debt. Common provision in insurance policies

Example of subrogation:

When a title insurance company pays a claim and then takes legal action against the party responsible for the claim, its known as subrogation

Question 2

To obtain full disclosure concerning encumbrances, taxes and assessments, a buyer can

a. read the listing agreement
b. read the purchase contract
c. order a title insurance policy
d. rely on the seller

Answer 2

C.

Question 3

A chain of title is a:

a. measurement used by a surveyor
b. listing of all recorded instruments affecting the title
c. certificate of title
d. list of the heirs of a deceased owner

Answer 3

B.

Question 4

In most RE sales transactions, the seller evidences good title through a

a. title affidavit
b. affidavit of value
c. attys certificate of title
d. title insurance policy

Answer 4

D.

Question 5

Merchantable title is

a. insured title
b. without cloud or defect
c. without encumbrances
d. a certificate of title

Answer 5

B.

Question 6

A summary of the history of a title is called the

a. abstract of title
b. certificate of title
c. chain of title
d. title insurance

Answer 6

A.

Question 7

A policy of title insurance in favor of the mortgagee insures the

a. lender
b. seller and lender
c. owner and lender
d. owner

Answer 7

A. LENDER…

REMEMBER !!-** the **MORTGAGEE** in **title insurance policies is the LENDER

Question 8

Tell me again who the MORTGAGEE is when you read a question relating to TITLE INSURANCE?

Answer 8

THE LENDER

Question 9

^{A standard title insurance policy includes coverage for}

a. items of record which are not disclosed in the policy
b. zoning ordinances
c. persons in possession of the property
d. errors a survey would show

Answer 9

A.

REMEMBER, Schedule A of a Standard owner’s policy lists the protections. Schedule B lists items not covered

Question 10

• In a standard owner’s title insurance policy, the pg of exceptions indicates the.*
• a. legal description*
• b. type of interest being insured*
• c. method of ownership for the buyers*
• d. liens and encumbrances of record*

Answer 10

D.

Question 11

• Which of the following items is covered by a standard owner’s policy?*
• a. encroachments*
• b. survey errors*
• c. person in possession*
• d. forgeries*

Answer 11

D.

Question 12

• An ALTA policy would be terminated under all of the following circumstances except*
• a. sale of the property and assumption of the loan*
• b. sale of the property with the buyer*
• c. refinance of the property*
• d. acceptance of a deed in lieu of foreclosure by the lender*

Answer 12

A.

Question 13

• When a title insurance company pays a claim and then takes legal action against the party responsible for the claim, its known as:*
• a. A. subordination*
• b. subrogation*
• c. defeasance*
• d. escheat*

Answer 13

B

Question 14

• When a preliminary title report or commitment for title insurance issued?*
• a. before closing*
• b. during closing*
• c. after closing*
• d. when the deed is recorded*

Answer 14

A. Before

Question 15

• Upon review of a title report, an atty finds gaps in the chain of ownership. What should the owner do to correct these title defects*
• a. obtain title insurance*
• b. file a quiet title action*
• c. secure an affidavit of title*
• d. obtain an affidavit of ownership from the county administration*

Answer 15

B.

Question 16

• Which is most likely to reveal all of the owners in a property history*
• a. cert of title*
• b. abstract of title*
• c. title report*
• d. affidavit of title*

Answer 16

B.

Question 17

If solar equipment is leased, to secure their interest w/ a lien, the lessor will require the property owner to execute

• a. deed of trust*
• b. mortgage*
• c. security agreement*
• d. estoppel agreement*

Answer 17

C.

Question 18

• To prioritize a security agreement signed by a lessee of solar equipment, the lessor may*
• a. record a dee of trust w/ the county recorder*
• b. file a UCC-1 financing statement w/ the Secretary of State*
• c. have a title co. conduct a UCC-1 search through the Sec. of State*
• d. require the lessee to record the lease*

Answer 18

B

Question 19

• Upon receipt of a preliminary title report, a licensee should*
• a. keep it in the transaction file for 5 yrs*
• b. forward it to the client by email*
• c. alert the client to any exceptions that would affect use or ownership rights*
• d. compare it to the abstract of title*

Answer 19

C.

Question 20

• Schedule B on a title policy would not contain which of the following*
• a. liens*
• b. type of conveying deed used*
• c. exceptions*
• d. CC&Rs*

Answer 20

B.

Question 21

• A loan is paid off, but the lender never records the lien release. The property would*
• a. be free and clear*
• b. be subject to foreclosure*
• c. have a cloud on title*
• d. require sheriff’s action to remove the lien*

Answer 21

C.

Question 22

• In a business sale, the equipment would be conveyed using*
• a. bill of sale*
• b. cert of sale*
• c. chattel security instrument*
• d. UCC-1*

Answer 22

A.

Question 23

• A prelim title report would disclose all of the following except*
• a. tax liens*
• b. easements*
• c. zoning*
• d. judgments requiring resolution*

Answer 23

C.

Question 24

• Which form of title evidence is commonly used in AZ?*
• a. abstract and opinion*
• b. title insurance*
• c. chain of title*
• d. certificate of title*

Answer 24

B.

Question 25

UCC Exam prep

Uniform Commercial Code-UCC

• Standardized _body of statutory law_ that governs commercial and business transactions = sale, financing, and leasing of personal property used as security for the debt.
• UCC-1 document** that is used to secure a lien w/ personal property **filed w/ state’s Secretary of State
• When SOLAR or WATER TREATMENT SYSTEMS are leased to property owners or businesses, the lessor often has the owner sign a security agreement and files a UCC-1

Question 26

STANDARD OWNER’s vs. ALTA Title

Standard Owner’s Policy BASED ON PURCHASE PRICE

Schedule A- **forged documents** Incompetent Grantors** Improperly drawn/delivered docs** Only one spouse signed to convey community property** Unknown/undiscovered heirs** Misfiled documents

Schedule B Not Covered **Existing liens/encumbrances of record **Mechanics liens not yet recorded** Persons in Possession** Encroachments/Errors a survey would reveal

ALTA TITLE POLICY BASED ON LOAN AMOUNT

• ALTA** policy ends when loans are paid off **NOT when loans are assumed

Same protection as Standard Owner’s policy PLUS

–**Mechanic’s Liens **not yet recorded

–Person’s in Possession

–Encroachments/Errors a survey would reveal