Unit 1 Chapter 12

Question 1

Title records

Answer 1

 Public notice – protect public by giving constructive notice of title
 Buyer protection – protect buyer by revealing if a property has marketable title
 Lienholder protection – protect lienholder by putting public on notice that the lien exists and that it may be
basis for foreclosure action

Question 2

Recording system

Answer 2

 No federal standards
 Torrens system – registration system wherein title passes only when the conveyance has been duly
registered on the title certificate; title record is title itself
 Court action must clear title before registration into Torrens

Question 3

Indiana requirements for title records

Answer 3

 Indiana Code includes requirements for recording documents

 Code includes affirmation statement and notary requirements in addition to other requirements

Question 4

Title evidence

Answer 4

 Seller must show title is free of doubts about identity of current owner, defects, claims that could affect
value, undisclosed or unacceptable encumbrances.
 Four principal forms of evidence – Torrens certificate, title insurance, attorney’s opinion of abstract, title
certificate

Question 5

Title insurance

Answer 5

 Best evidence of marketable title when no Torrens certificate
 Covers losses title search would not; provides protection against loss if there are defects or claims
against title

Question 6

Commitment

Answer 6

 Title insurance company investigates title and, if satisfied that title is clear, issues a commitment to insure
in the buyer’s name

Question 7

Owner’s policy

Answer 7

 Standard or extended coverage
 Protects against losses from such title defects as forged documents, undisclosed heirs, incorrectly given
marital status, etc.
 Does not protect against such defects as rights of parties in possession, anything not recorded, etc.
 Will clear up title problems or pay insured’s losses
 Remains in effect as long as insured or insured’s heirs retain interest in property

Question 8

Lender’s policy

Answer 8

 Borrower must obtain insurance protecting lender as condition of first mortgage loan
 Coverage is equal to amount of loan; reduces as loan does
 Normally paid by buyer
 Stays in effect as long as loan remains on property