Transfer of Title 8% Flashcards
What is title insurance?
An insurance policy that protects an owner or mortgagee again title defects.
What does title insurance insure against?
- Title to the interest described in Schedule A being vested in the grantee other than as stated in the deed.
- Un-marketability of title.
- Defects, liens, or encumbrances affecting the title.
- Challenges to the owner’s right to access his property.
What is a title search?
An examination of the public records to determine the current state of the title, who the current owner is, and whether or not any defects exist.
What is the abstract of a title?
The history of chain of title; Document that traces the history of title of a particular parcel of real estate from the original government grant through the chain of ownership including all conveyances and encumbrances affecting the property.
What is the chain of title?
An official record which lists everyone who has owned a particular property, and when they became the owner.
Marketable Title vs. Insurance Title
When a title is marketable it means that the chain of ownership (title) to a particular piece of property is clear and free from defects. However, with an insurable title, a title insurance company has agreed in advance to provide insurance against the defects ever affecting the ownership or value of the property.
What are potential title problems and resolutions?
- Is the title marketable or salable?
- Are there any unpaid taxes, unpaid municipal utility bills, existing mortgages, or other liens of record that must be satisfied?
- Are there any other interests in the public records such as other deed restrictions or easements that pose an encumbrance significant enough to affect the marketability of the title?
What is a Deed?
A legal written document conveying ownership of a property.
What makes a Deed valid?
To be valid a deed must be a written document, signed and witnessed, delivered and accepted.
What is a General Warranty Deed and when is it used?
A warranty deed is when the grantor guarantees (warrants) that the title is good and marketable. It provides the buyer with the most protection.
It is used when a buyer wants to get financing for a mortgage or title insurance.
What covenant does a warranty deed provide?
- Covenant of seisin: this guarantees that the grantor owns the property and has the right to transfer the ownership.
- Covenant of quiet enjoyment: this warrants that the title to the property will not be claimed by a third party. If in the future a third party provides a better claim to the property, the grantor will make good on any losses that the grantee suffers as a result of the third party’s claim.
- Covenant against encumbrances: The grantor guarantees that there are no encumbrances such as liens of easements against the property other than the easements stated in the deed.
- Covenant of further assurance: Grantor promises to provide any documents or perform any actions needed to clear up any errors or problems with the deed.
What is a Special Warranty Deed and when is it used?
It guarantees only that the grantor has legal title and hasn’t places any encumbrances on the property while holding the title.
Unlike a general warranty deed, a special warranty deed guarantees the actions of the person conveying the title, not the complete history of the property.
The most common use of the special warranty deed is for sales of properties that have been seized and sold, like foreclosure or unpaid taxes.
Can also be used for executors of estates and trustees.
What is a Grant Deed and when is it used?
A grant deed limits the warranties to the time that the grantor owned the property.
The grantor warrants only that they
- Have not conveyed the property to anyone else.
- Have encumbered the property only as noted in the deed.
- Will convey to the grantee any interest that the grantor may acquire in the property at some layer time.
What is a Quitclaim Deed and when is it used?
A quitclaim deed has no warranties attached to it. It just conveys the interest that the grantor has in the property.
It is used to clear up the cloud on a title when the buyer in a land contract defaults and the seller wants to resell the land.
What is a Deed of Trust and when is it used?
A deed of trust is used as security for a loan and conveys title from the truster to a trustee for the beneficiary. The truster is the borrower, the beneficiary may take back the property or the trustee may sell the property and give the beneficiary the proceeds.
