Transfer of Title Flashcards
What is title insurance?
insurance that protects buyers and lenders (through separate policies) against financial loss that might be incurred because of title defects discovered after closing
How much financial protection does title insurance protect a lender from?
The amount of the mortgage
What is a title abstract?
A summary of the property’s title history
What is a grantor-grantee index?
The chain of a title - when a gap exists, it must be resolved before a clear title can be given
What are the two standards of titles?
Marketable and insurable
What is a marketable title?
a title that has no defects or clouds to which a reasonable buyer would object
What is an insurable title?
a title that has known defects (such as an easement) that the title company has notified all parties of - but still agrees to insure the title
What is a cloud on title?
any encumbrance, such as a lien, or inheritance claim, that prevents the seller from providing clear, marketable title
What is the most common title defect?
The seller’s mortgage lein
What is a deed?
A written and signed legal instrument of conveyance
What does a deed do?
Legally transfers (conveys) title to real property from the owner (grantor) to the new owner (grantee)
What are the most common types of deeds?
general warranty, special warranty, and quitclaim deeds
Which deed provides the greatest warranty to buyers?
general warranty deed
What are the six covenants of the general warranty deed?
covenant of seisin, covenant of right to convey, covenant against encumbrances, covenant of quit enjoyment, covenant of further assurances, covenant of warranty or warranty forever
When is a special warranty deed most commonly used?
Commercial properties
What is a deed in trust?
A deed that conveys real estate to a trustee or the beneficiary named in the trust agreement
What must a deed include?
a grantor, grantee, act of conveyance, named consideration, legal description, limitations or clauses, habendum clause, grantor’s signature, acceptance by the grantee, acknowledgement (notarized signature)
When and where is the deed recorded?
once the grantor’s signature has been acknowledged, the jurisdiction in which the property is located
Who files the form 1099-s?
The escrow agent
What are typical prorations?
property taxes and HOA fees, fuel, water and sewer charges
What are accrued prorate items and how will they be handled on closing day?
items the seller owes on closing day that will eventually be paid by the buyer, they appear as debit’s in the seller’s column and credits in the buyer’s column
What are examples of accrued prorate items?
unpaid current property taxes
What are pre-paid prorate expenses and how will they be recorded on closing day?
expenses already paid by the seller, but they buyer should pay a portion of, these items are credited to the seller, and debited to the buyer.
What are examples of pre-paid prorate expenses?
pre-paid real estate taxes and utilities paid in advance
