Transfer and Recording of Title

Question 1

Recording/Recordation

Answer 1

Public filing of a document
Ex. Ownership cannot be established until the deed is recorded.

Question 2

Constructive Notice

Answer 2

A public recordation of an event, meaning notice was published but not necessarily given directly to the affected parties while still technically being available in the public record
Ex. Karen’s conveyance of her deed was publicly recorded; this was constructive notice to the world that she had sold her property and that Vince was the new owner

Question 3

Actual Notice

Answer 3

Express notice given directly to a person or actual knowledge that is known
Ex. Karen told her neighbors she would be moving.

Question 4

Title

Answer 4

The legal concept of property ownership and the rights that go with it
Ex. When the transaction between Karen and Vince is closed, Vince will have title to Karen’s property.

Question 5

Marketable Title

Answer 5

has no defects or clouds to which a reasonable buyer would object.

Question 6

Insurable Title

Answer 6

one against which there may be known defects (such as easements), but the title company has notified the parties of the defect and has agreed to insure against it and not list it as a policy exception

Question 7

Evidence of Title

Answer 7

Proof of property ownership, usually a deed
Ex. In a real estate transaction, the seller must provide evidence of title and also prove that the property is owned free and clear.

Question 8

Title Commitment

Answer 8

A document outlining that a title insurance policy will be issued to the buyer provided certain conditions are met (usually a required payoff of liens or other title defects)
Ex. A title commitment is issued after a detailed title search uncovers any outstanding liens, mortgages, or other title defects that would prevent the title from transferring clearly.

Question 9

Abstract of Title

Answer 9

A condensed history of a title; a summary of all links in the chain, including other public record matters affecting the title, a legal description of the property, and a summary of every related document in chronological order
Ex. Karen’s abstract of title showed ownership of her property back to the time the property was developed.

Question 10

Title Search

Answer 10

The legal description of the property: Can the property that is being transferred be correctly and accurately identified through a legal property description?

Ownership: Who rightfully owns the property, and how is title held?
Encumbrances: Are there any existing liens, easements, or restrictions against the property?

Judgments: Are there any outstanding judgments against the property at the municipal, state, or federal level? Is there any pending civil litigation? Is the property under foreclosure proceedings?

Divorce: Are there any pending divorce proceedings?

Secured transactions: Has the property owner entered into any agreements that give a creditor or creditors ownership rights to the property should the current owner be in default?

Question 11

Chain of Title

Answer 11

Establishes the title history or the path and proof of property ownership through a public records search for successive conveyances of title and encumbrances; each owner is considered to be a “link” in the chain
Ex. Karen’s chain of title showed no gaps in ownership since the time it was built.

Question 12

Certificate of Title

Answer 12

A statement of opinion on the status of a title to real property
Ex. The certificate of title is issued after a review of public records.

Question 13

Attorney Title Opinion

Answer 13

When an attorney is the one to provide the certificate of title

Question 14

Title commitments vary by state and company, but generally include the following sections:

Answer 14

Schedule A: Provides information related to the transaction

Schedule B: Lists unrecorded matters that either couldn’t be or weren’t researched in preparing the report

Schedule C: Lists recorded objections that could be found

Question 15

Title Insurance

Answer 15

An insurance contract insuring the policy owner against financial loss if the title to real estate is defective
Ex. Because title defects sometimes are not public record, and are not found in a title search, Vince purchased title insurance to protect his interests.

Question 16

Extended Coverage Policy

Answer 16

A title insurance policy that covers the buyer in case defects in title come up after closing
Ex. An extended coverage policy is usually issed to be effective on the date of closing.

Question 17

Subrogation

Answer 17

The substitution of one party for another whose debt the party pays, allowing the paying party the rights and remedies that would otherwise belong to the debtor.
Ex. Because the title company paid his debt off, Mort, the contractor, agreed to subrogate his rights in the foreclosure.

Question 18

Schedule of Exceptions

Answer 18

The list of items a title insurance policy does not cover
Ex. When a lost relative of the former owner stepped forward to claim ownership of her property, Mary noted that this eventuality was listed in the schedule of exceptions on her title insurance policy. She was on her own fighting this claim in court.

Question 19

Lender’s Policy

Answer 19

A title insurance policy that protects the lender’s interest in the property for the amount of the loan
Ex. The value of the policy decreases as the loan is paid down.

Question 20

Owner’s Policy

Answer 20

A title insurance policy that covers the borrower in case title defects come up after closing
Ex. An owner’s extended coverage policy is usually issued to be effective on the date of closing.

Question 21

Cloud on Title

Answer 21

Aka title defect; any encumbrance, such as a lien or inheritance claim, that impedes the conveyance of a property; may be removed with a quitclaim deed
Ex. Erica was in the process of buying a foreclosure property, when an unknown lien cropped up, creating a cloud on the title. The lien had to be removed before Erica could buy the property.

Question 22

Quitclaim Deed (non-warranty deed)

Answer 22

A deed that does not offer any warranties but simply releases the current owner’s claims to the property
Ex. When Bill and Martha divorced, Martha signed over her interest in their property to Bill through a quitclaim deed.

Question 23

Quiet Title

Answer 23

A court action to remove a cloud on a title
Ex. Because the records indicated there was an unpaid debt, which created a lien against the title—even though the debt had been paid off—the Martins initiated a suit to quiet the title.

Question 24

Voluntary Alienation

Answer 24

The transfer of real property ownership with the owner’s consent (e.g., traditional sale)
Ex. When Craig sold his property to Yvette, this was an example of voluntary alienation.

Question 25

Deed

Answer 25

A legal document conveying title to or interest in real estate; establishes legal ownership
Ex. A deed’s powers of conveyance are dependent on the execution and delivery of the deed between the grantor and grantee.

Question 26

Grantor/Grantee

Answer 26

The grantee is the recipient of the deed (usually the new buyer); the grantor is the giver of the deed (usually the seller)
Ex. When Carol bought Todd’s property, Todd gave her a deed. Todd was the grantor, and Carol was the grantee.

Question 27

Deed Esentials/Elements

Answer 27

Grantor/grantee
Granting clause/act of conveyance
Consideration
Legal description
Habendum clause
Exceptions or reservations to conveyance of full title/Subject to clause
Acknowledgment/recording of grantor signature
Delivery and acceptance

Question 28

Conveyance

Answer 28

The legal transfer of property ownership to another
Ex. In feudal times, the conveyance of property was conducted on the property itself when the former landowner handed the future landowner a symbol of the transfer, such as a stone, twig, or bit of soil.

Question 29

Consideration

Answer 29

The giving of something of value, which can include the agreement to not do something. Consideration is a required element of a binding contract.
Ex. Carly is a buyer and Wade is a seller. Carly gives Wade earnest money and a promise to purchase his property. This is her consideration. Wade’s consideration to Carly is his agreement to sell his property.

Question 30

Legal Description

Answer 30

A method of identifying a property in written words that allows for an unambiguous interpretation of a property’s boundaries and location
Ex. Although a street address may hold up in court, it’s best to include an accurate legal description as best practice when conveying real property.

Question 31

Habendum Clause

Answer 31

A deed clause containing the words “to have and to hold,” and which describes the interests and rights of the grantee
Ex. The habendum clause provisions must agree with the provisions stated in the granting clause.

Question 32

Subject to Clause

Answer 32

A buyer can purchase a property “subject to” the seller’s loan; the buyer is supposed to continue payment of that loan, but the seller is still ultimately liable for it
Ex. Tammy bought Sam’s house subject to his loan. If Tammy stops making payments, though, Sam will still be ultimately responsible for them.

Question 33

Delivery and Acceptance

Answer 33

Delivery is the act of giving the deed to the grantee; acceptance is the grantee’s receipt of the deed.
Ex. After the buyer and seller closed on the transaction, the deed was delivered to the title company, who provided an acknowledged copy to the buyer. The recording of the deed presumed buyer’s acceptance.

Question 34

Acknowledgement

Answer 34

an oath of a subscribing witness, such as a notary public

Question 35

Recording

Answer 35

protects the grantee from the grantor selling the same property to future buyers.

Question 36

Equitable Title

Answer 36

A right in property to have legal title conveyed once terms of the purchase agreement are met
Ex. When a buyer purchases through a land sales contract, the seller holds legal title until the final payment is made. In the meantime, the buyer has equitable title

Question 37

Legal Title

Answer 37

Ownership interest that is enforceable by law
Ex. In order to have absolute ownership of a property, the owner must hold legal title.

Question 38

Assessed Value

Answer 38

The dollar amount to which the local tax rate is multiplied to determine property tax owed
Ex. Although the appraised value of Myra’s bed and breakfast was $600,000, her tax assessed value was only $475,000.

Question 39

Transfer Tax

Answer 39

A tax applied upon the recordation of a transfer of ownership in real property; sometimes referred to as revenue stamps or tax stamps
Ex. Transfer tax may also be tax stamps applied to a deed and paid for by the buyer or seller in a real estate transaction.

Question 40

Revenue Stamps

Answer 40

A tax applied upon the recordation of a transfer of ownership in real property. May also be referred to as transfer tax
Ex. Transfer tax becomes payable when the deed is recorded, sometimes through the purchase of “revenue stamps” from the recorder of the county in which the property is located.

Question 41

Property Ownership Life Cycle

Answer 41

Acquiring the property
Owning the property
Reverting/selling the property

Question 42

Short Sale

Answer 42

A distressed homeowner sells a property for less than is owed; requires lender approval
Ex. Tallah did a short sale on her home; she owed $240,000 and it only brought $225,000. Her lender may pursue the difference in a deficiency judgment.

Question 43

Deed in Lieu of Foreclosure

Answer 43

A defaulting borrower voluntarily conveys the deed to the lender to avoid foreclosure
Ex. An offer of a deed in lieu of foreclosure does not have to be accepted by the lender; the lender may choose to foreclose.

Question 44

Real Estate Owned (REO)

Answer 44

Real estate owned property; when foreclosed homes don’t sell at auction, they become a real estate owned (bank-owned) property
Ex. Ella loved the challenge of working with investors interested in REOs.