Unit 21 Flashcards
1
Q
Learning Objective: Describe the various requirements for a valid deed.
A
Answer: A valid deed in Texas must include the following: a grantor with legal capacity to contract, a readily identifiable grantee, a recital of consideration, a legal description of the property, a granting clause, the signature of the grantor, and delivery and acceptance. Additionally, the deed should be acknowledged or sworn before a notary public for recording.
2
Q
Learning Objective: Identify the four fundamental types of deeds, their functions, and their warranties.
A
Answer:
General Warranty Deed: Provides the greatest protection, including covenants of seisin and warranty.
Special Warranty Deed: Warrants only that the grantor has not encumbered the title during their ownership.
Deed Without Warranty: Implies the grantor holds title but offers no warranties.
Quitclaim Deed: Conveys only the grantor’s interest without warranties, providing the least protection.
3
Q
Learning Objective: Explain how property may be transferred through adverse possession and other involuntary means.
A
Answer: Adverse possession allows someone to acquire property after openly using it for 10 years. Other involuntary transfers include foreclosure, tax sales, eminent domain, escheat, or natural forces like erosion and accretion.
4
Q
Learning Objective: Distinguish transfers of title by will from transfers by intestate succession, including the disposition of community and separate property in each situation.
A
Answer: Transfers by will (testate) occur under the terms of the testator’s last will and testament. Transfers by intestate succession (no will) follow state laws of descent and distribution. Community property is typically divided equally between surviving spouses and heirs, while separate property is distributed based on state law.
5
Q
Learning Objective: Explain the necessity for recording legal documents and the difference between constructive and actual notice.
A
Answer: Recording legal documents gives constructive notice of interests in real estate, making them legally binding on third parties. Constructive notice is presumed when documents are recorded, while actual notice involves personally learning about an interest in property.
6
Q
Learning Objective: Identify the process and purpose of a title search.
A
Answer: A title search involves examining public records to establish a chain of title, verify ownership, and uncover encumbrances or defects. Its purpose is to ensure marketable title and identify any issues that might affect ownership rights.
7
Q
Learning Objective: Describe the origin of Texas land titles and the two evidences of title commonly used in Texas.
A
Answer: Texas land titles originate from Spanish, Mexican, and Republic of Texas land grants. Evidence of title includes an abstract of title with an attorney’s opinion or title insurance, which protects against losses from defects.
8
Q
Learning Objective: Distinguish between lender’s and owner’s title policies, including covered and excluded risks, and between actual marketable title and good and indefeasible title.
A
Answer:
Lender’s Title Policy: Protects lenders against defects and encumbrances.
Owner’s Title Policy: Protects owners from title defects.
Marketable Title: Free of significant defects.
Good and Indefeasible Title: Cannot be defeated by superior claims.
9
Q
Key Term: Acknowledgment
A
Definition: A formal declaration before a notary public confirming the authenticity of a signature on a document.
9
Q
Key Term: Abstract of Title
A
Definition: A condensed history of all recorded instruments affecting a specific parcel of land.
10
Q
Key Term: Actual Notice
A
Definition: Direct knowledge of a fact acquired personally or through evidence.
11
Q
Key Term: Adverse Possession
A
Definition: A method of acquiring title by openly and continuously using property for a statutory period, typically 10 years in Texas.
12
Q
Key Term: Attorney’s Opinion of Title
A
Definition: A lawyer’s written assessment of the title’s condition based on a review of an abstract of title.
13
Q
Key Term: Bargain and Sale Deed
A
Definition: A deed that implies the grantor holds title but does not include warranties against encumbrances.
14
Q
Key Term: Bequest
A
Definition: The transfer of personal property through a will.
15
Q
Key Term: Chain of Title
A
Definition: A chronological record of all recorded conveyances affecting a specific property.
16
Q
Key Term: Codicil
A
Definition: A legal document that modifies or supplements a will without revoking it.
17
Q
Key Term: Commitment
A
Definition: A preliminary document issued by a title company outlining the terms and conditions for issuing title insurance.
18
Q
Key Term: Constructive Notice
A
Definition: Legal notice presumed to have been given when documents are recorded in the public record.
19
Q
Key Term: Decedent
A
Definition: A person who has passed away.
20
Q
Key Term: Deed
A
Definition: A written document that transfers ownership of real property from one party to another.
21
Q
Key Term: Deed in Trust
A
Definition: A deed transferring real property to a trustee under a trust agreement.
22
Q
Key Term: Deed Without Warranty
A
Definition: A deed that implies the grantor holds title but offers no warranties or guarantees.
23
Q
Key Term: Delivery and Acceptance
A
Definition: The process by which a deed is delivered to a grantee and accepted to complete a property transfer.
24
Key Term: Evidence of Title
Definition: Proof of ownership of real property, such as an abstract of title or title insurance.
25
Key Term: Formal Will
Definition: A written, signed, and witnessed will created according to statutory requirements.
26
Key Term: General Warranty Deed
Definition: A deed offering the highest level of protection to the grantee, including guarantees against defects in the title.
27
Key Term: Good and Indefeasible Title
Definition: A title that cannot be defeated by a superior claim.
28
Key Term: Granting Clause
Definition: The portion of a deed that explicitly states the grantor's intent to transfer ownership.
29
Key Term: Grantor/Grantee Indices
Definition: Public records listing property transactions by the names of the grantors and grantees.
30
Key Term: Habendum Clause
Definition: The portion of a deed defining the ownership rights being transferred, often beginning with "to have and to hold."
31
Key Term: Heir
Definition: A person legally entitled to inherit property from a deceased individual.
32
Key Term: Holographic Will
Definition: A handwritten will that is valid without witnesses in certain jurisdictions.
33
Key Term: Intestate
Definition: The condition of dying without leaving a valid will.
34
Key Term: Involuntary Alienation
Definition: Transfer of property ownership without the owner’s consent, often through foreclosure, eminent domain, or escheat.
35
Key Term: Jurat
Definition: The part of an affidavit where the notary certifies that the document was sworn to or affirmed.
36
Key Term: Last Will and Testament
Definition: A legal document that specifies how a person’s property will be distributed after their death.
37
Key Term: League
Definition: A historic land measurement equal to approximately 4,428.4 acres.
38
Key Term: Marketable Title
Definition: Title free from significant defects, ensuring the buyer does not have to defend ownership in court.
39
Key Term: Priority
Definition: The order of rights in time, often established by the recording date of documents.
40
Key Term: Probate
Definition: The legal process of validating a will and settling an estate after a person’s death.
41
Key Term: Quitclaim Deed
Definition: A deed transferring whatever interest the grantor holds in the property without warranties.
42
Key Term: Recording
Definition: The process of filing documents in public records to give legal notice of interests in real property.
43
Key Term: Special Warranty Deed
Definition: A deed in which the grantor warrants the title only against encumbrances incurred during their ownership.
44
Key Term: Subrogation
Definition: The right of a title insurer to assume the insured’s claim against a third party after settling a title defect.
45
Key Term: Suit to Quiet Title
Definition: A legal action to settle disputes or claims regarding the ownership of real property.
46
Key Term: Testate
Definition: The condition of dying with a valid will in place.
47
Key Term: Testator
Definition: A person who makes a valid will.
48
Key Term: Title Insurance
Definition: A policy protecting against losses due to defects or encumbrances in a property’s title.
49
Key Term: Title
Definition: Legal ownership of real property, including the bundle of rights associated with ownership.
50
Key Term: Title Search
Definition: An examination of public records to verify ownership and identify encumbrances on a property.
51
Key Term: Trustee’s Deed
Definition: A deed executed by a trustee transferring property held in a trust.
52
Key Term: Voluntary Alienation
Definition: The intentional transfer of property ownership, such as by sale or gift.
53
Key Term: Warranty Clause
Definition: A clause in a deed in which the grantor guarantees the quality of the title being conveyed.
54
Key Point Question: What are the four ways title to real estate may be transferred?
Answer: Title to real estate may be transferred through voluntary alienation, involuntary alienation, by will, or by descent.
55
Key Point Question: What is required for a valid deed in Texas?
Answer: A valid deed in Texas requires a grantor with legal capacity to contract, a readily identifiable grantee, a recital of consideration, a legal description of the property, a granting clause, the grantor’s signature, and delivery and acceptance.
56
Key Point Question: What happens if a deed is executed by someone under age 18 or if the grantee is fictitious?
Answer: A deed executed by someone under age 18 is voidable. A deed naming a wholly fictitious grantee is void.
57
Key Point Question: Why is acknowledgment or notarization important for deeds?
Answer: Acknowledgment or notarization allows a deed to be recorded, which provides legal notice and establishes the effective date of the transfer.
58
Key Point Question: What additional elements may be included in a deed for clarification purposes?
Answer: Deeds may include clauses for exceptions, reservations, limitations on conveyance, habendum clauses, and warranty clauses to clarify the transfer's terms.
59
Key Point Question: What determines a grantor’s obligation under a deed?
Answer: The grantor’s obligation is determined by the type of deed, such as a general warranty deed, special warranty deed, deed without warranty, or quitclaim deed.
60
Key Point Question: What protections do the different types of deeds offer?
Answer:
General Warranty Deed: Provides the greatest protection, including covenants of seisin and warranty.
Special Warranty Deed: Warrants only against encumbrances during the grantor’s ownership.
Deed Without Warranty: Offers no warranties, leaving little legal recourse for the grantee.
Quitclaim Deed: Transfers only the interest the grantor possesses with no warranties.
61
Key Point Question: How can an owner’s title be transferred without permission?
Answer: Title may be transferred involuntarily through foreclosure, tax sales, condemnation, adverse possession, escheat, or natural forces like erosion and accretion.
62
Key Point Question: What is the purpose of the recording acts?
Answer: The recording acts provide constructive notice to the public of parties’ interests in real estate and establish priority based on the date and time of recording.
63
Key Point Question: How is constructive notice different from actual notice?
Answer: Constructive notice occurs when documents are properly recorded in public records, while actual notice is direct knowledge acquired personally.
64
Key Point Question: What is a title insurance policy, and what does it cover?
Answer: A title insurance policy protects against losses due to title defects, covering situations like forged documents, errors in public records, and unknown encumbrances, except those listed as exceptions in the policy.
65
Key Point Question: What are the two forms of title evidence used in Texas?
Answer: The two forms of title evidence in Texas are (1) an abstract of title with an attorney’s opinion and (2) a title insurance policy.
66
Key Point Question: What does a commitment for title insurance include?
Answer: A commitment for title insurance includes the insured party’s name, a legal description of the real estate, the estate or interest covered, a schedule of exceptions, and the conditions under which the policy is issued.
67
Key Point Question: What is marketable title, and how does it differ from good and indefeasible title?
Answer: Marketable title is free from significant defects, while good and indefeasible title is not subject to defeat by a superior claim.
68
Question 1: Title to real estate may be transferred during a person’s lifetime by which of the following means?
A. Escheat
B. Descent
C. Involuntary alienation
D. Devise
Answer: C – Involuntary alienation.
Reasoning for the answer: Involuntary alienation involves title transfers by legal processes such as foreclosure or eminent domain, occurring during a person’s lifetime.
69
Question 2: Every deed must be signed by
A. the grantor.
B. the grantee.
C. the grantor and grantee.
D. the devisee.
Answer: A – The grantor.
Reasoning for the answer: The grantor must sign the deed to convey ownership, but the grantee’s signature is not required.
70
Question 3: Alicia, age 15, recently inherited many parcels of real estate from her late father and has decided to sell one of them. If Alicia signed a deed conveying her interest in the property to a purchaser without the signature of her legal guardian, such a conveyance would be
A. valid.
B. void.
C. invalid.
D. voidable.
Answer: D – Voidable.
Reasoning for the answer: Contracts or deeds executed by minors are generally voidable at their discretion but not inherently void.
71
Question 4: To voluntarily transfer a right, title, or interest in real estate, an owner may use all the various deeds of conveyance EXCEPT
A. a sheriff’s title.
B. a warranty deed.
C. a quitclaim deed.
D. a deed in trust.
Answer: A – A sheriff’s title.
Reasoning for the answer: A sheriff’s deed is used in involuntary transfers, such as foreclosures or court-ordered sales, not voluntary transactions.
72
Question 5: Title to an owner’s real estate can be transferred at the death of the owner by which one of the following documents?
A. Special warranty deed
B. Trustee’s deed
C. Last will and testament
D. Quitclaim deed
Answer: C – Last will and testament.
Reasoning for the answer: A will specifies the transfer of property upon the testator's death, making it the document used to transfer title after death.
73
Question 6: Ken signed a deed transferring ownership of a property to Terrence. To provide evidence that Ken’s signature was genuine, Ken executed a declaration before a notary. This declaration is known as
A. an affidavit.
B. an acknowledgment.
C. an affirmation.
D. an estoppel.
Answer: B – An acknowledgment.
Reasoning for the answer: An acknowledgment is a formal declaration made before a notary or other authorized official to verify the authenticity of a signature.
74
Question 7: Matilda inherited acreage in a distant Texas county, never went to see the acreage, and did not use the ground. Harold moved his mobile home onto the land, had a water well drilled, and lived there for 26 years. Harold might become the owner of the land if he has complied with Texas law regarding
A. adverse possession.
B. avulsion.
C. voluntary alienation.
D. descent and distribution.
Answer: A – Adverse possession.
Reasoning for the answer: Adverse possession allows someone to claim ownership of property after openly using and occupying it for a statutory period (10 years in Texas).
75
Question 8: A grantee receives the greatest protection with what type of deed?
A. Quitclaim
B. General warranty
C. Deed without warranty
D. Special warranty
Answer: B – General warranty.
Reasoning for the answer: A general warranty deed provides the most comprehensive protections, including warranties against title defects and encumbrances.
76
Question 9: Alvin executes a deed to Sylvia as grantee, has it acknowledged, and receives payment from Sylvia. Alvin holds the deed, however, and arranges to meet Sylvia the next morning at the courthouse to deliver the deed to her. In this situation at this time,
A. Sylvia owns the property because she has paid for it.
B. Title to the property will not officially pass until Sylvia has been given the deed the next morning.
C. Title to the property will not pass until Sylvia has received the deed and recorded it the next morning.
D. Sylvia will own the property when she has signed the deed the next morning.
Answer: B – Title to the property will not officially pass until Sylvia has been given the deed the next morning.
Reasoning for the answer: Title passes upon delivery and acceptance of the deed, which has not yet occurred.
77
Question 10: Xavier, a bachelor, died owning real estate that he devised by will to his niece, Annette. In essence, at what point does title pass to his niece?
A. Immediately upon Xavier’s death
B. After Annette has paid all inheritance taxes
C. After the executor executes a new deed to the property
D. When Annette executes a new deed to the property
Answer: A – Immediately upon Xavier’s death.
Reasoning for the answer: Title to property devised in a will passes immediately upon the testator's death, subject to probate.
78
Question 11: A person who pays for and receives a quitclaim deed
A. will receive whatever interest the grantor possessed in the property.
B. can force the grantor to make the title good by a suit in court.
C. receives the greatest protection of any deed.
D. cannot receive fee simple title.
Answer: A – Will receive whatever interest the grantor possessed in the property.
Reasoning for the answer: A quitclaim deed transfers only the interest the grantor has in the property at the time of transfer, with no warranties or guarantees.
79
Question 12: Hap conveys property to Kasey by deed. The deed contains the following: (1) Kasey’s name spelled out in full, (2) a statement that Hap has received $10 and Kasey’s love and affection, and (3) a statement that the property is conveyed to Kasey “to have and to hold.” Which of the following correctly identifies, in order, these three elements of the deed?
A. Grantee; consideration; granting clause
B. Grantee; consideration; habendum clause
C. Grantor; habendum clause; legal description
D. Grantee; acknowledgment; habendum clause
Answer: B – Grantee; consideration; habendum clause.
Reasoning for the answer: The grantee is identified, followed by consideration (payment), and the habendum clause, which defines the ownership rights being transferred.
80
Question 13: An owner of Texas real estate, who was judged legally incompetent, later made a will during his stay at a nursing home. He died and was survived by a wife and three children. His real estate will pass
A. to his wife.
B. to the heirs mentioned in his will.
C. by the laws of descent and distribution as if no will had been made at all.
D. to the state.
Answer: C – By the laws of descent and distribution as if no will had been made at all.
Reasoning for the answer: A will made by a legally incompetent person is invalid, so the property is distributed under the state’s intestate succession laws.
81
Question 14: A warranty deed usually implicitly obligates the grantor to the following warranties EXCEPT
A. Seisin.
B. Escheat.
C. Against encumbrances.
D. Further assurance.
Answer: B – Escheat.
Reasoning for the answer: Escheat is a government action, not a warranty covered by a grantor in a deed.
82
Question 15: Entrepreneur Harley is purchasing a large apartment building in a choice urban location. For financial and professional reasons Harley wants to hold the property as beneficiary under a land trust. Which instrument would be used to create this trust?
A. Trust deed
B. Deed of trust
C. Trustee trust
D. Deed in trust
Answer: D – Deed in trust.
Reasoning for the answer: A deed in trust conveys real property to a trustee to hold for the benefit of a beneficiary as part of a land trust.
83
Question 16: Which is NOT a way in which title to real estate may be transferred by involuntary alienation?
A. Eminent domain
B. Escheat
C. Erosion
D. Seisin
Answer: D – Seisin.
Reasoning for the answer: Seisin is a legal concept referring to ownership of property, not a means of transferring title through involuntary alienation.
84
Question 17: A person who died leaving a valid will is called
A. a devisee.
B. a testator.
C. a legatee.
D. an intestator.
Answer: B – A testator.
Reasoning for the answer: A testator is a person who has made a valid will before passing away, specifying how their property should be distributed.
85
Question 18: The statute or act that creates the need for a deed to be in writing in order to be enforceable is
A. the law of descent and distribution.
B. the statute of frauds.
C. the statute of limitations.
D. the Texas Real Estate License Act.
Answer: B – The statute of frauds.
Reasoning for the answer: The statute of frauds requires that certain agreements, including those for the sale or transfer of real estate, must be in writing to be enforceable.
86
Question 19: An instrument authorizing one person to act for another is called
A. a power of attorney.
B. a release deed.
C. a quitclaim deed.
D. an acknowledgment.
Answer: A – A power of attorney.
Reasoning for the answer: A power of attorney authorizes one individual to act on behalf of another in legal or financial matters.
87
Question 20: An owner’s title insurance policy with standard coverage generally covers all EXCEPT
A. forged documents.
B. rights of parties in possession.
C. incompetent grantors.
D. improperly delivered deeds.
Answer: B – Rights of parties in possession.
Reasoning for the answer: Standard owner’s title insurance policies generally exclude coverage for parties in possession, such as tenants or unrecorded claims.
88
Question 21: A mortgagee’s title policy protects which parties against loss?
A. Buyers
B. Sellers
C. Lenders
D. Buyers and lenders
Answer: C – Lenders.
Reasoning for the answer: A mortgagee’s title insurance policy protects the lender’s financial interest in the property, ensuring the validity of their lien.
89
Question 22: Phil bought Larry’s house, received a deed, and moved into the residence but neglected to record the document. One week later, Larry died and his heirs in another city, unaware that the property had been sold, conveyed title to Melvin, who recorded the deed. Who owns the property?
A. Phil
B. Melvin
C. Larry’s heirs
D. Both Phil and Melvin
Answer: A – Phil.
Reasoning for the answer: Even though Phil did not record the deed, his possession of the property constitutes actual notice, making his ownership valid over Melvin's recorded deed.
90
Question 23: Which is a distinguishing characteristic of good and indefeasible title?
A. It is free from significant liens and encumbrances.
B. It discloses no serious defects regarding validity.
C. It convinces a reasonably well-informed and prudent person that they could sell the property.
D. It cannot be defeated by a superior claim.
Answer: D – It cannot be defeated by a superior claim.
Reasoning for the answer: Good and indefeasible title ensures that no superior legal claims can void the property owner’s rights.
91
Question 24: When the title examination is completed, the title insurance company notifies the buyer in writing of the condition of the title. This notification is called
A. a chain of title.
B. commitment for title insurance.
C. an abstract.
D. an escrow statement.
Answer: B – Commitment for title insurance.
Reasoning for the answer: A title commitment outlines the conditions under which the title insurance policy will be issued.
92
Question 25: Albert and Danielle purchased a ranch house near El Paso. To provide evidence of their ownership, they obtained a title insurance policy. The policy
A. guarantees that they own the property.
B. will reimburse, up to the amount of the policy, losses that Albert and Danielle sustain as a result of incompetent grantors.
C. will terminate when they sell the property in the future.
D. does not guarantee good and indefeasible title.
Answer: B – Will reimburse, up to the amount of the policy, losses that Albert and Danielle sustain as a result of incompetent grantors.
Reasoning for the answer: Title insurance protects against losses due to title defects, including those caused by incompetent grantors.
93
Question 26: A purchaser went to the county clerk’s office to check the records. She found that the seller was the grantee in the last recorded deed and that no mortgage was on record against the property. Thus, the purchaser may assume that
A. all taxes are paid and no judgments are outstanding.
B. the seller has good title.
C. the seller did not mortgage the property.
D. the seller inherited the property free and clear.
Answer: C – The seller did not mortgage the property.
Reasoning for the answer: If no mortgage is recorded in the public records, the purchaser may assume that the property is not encumbered by a mortgage.
94
Question 27: An abstract is usually examined by
A. the broker.
B. the abstract company.
C. the purchaser.
D. the attorney for the purchaser.
Answer: D – The attorney for the purchaser.
Reasoning for the answer: An attorney examines the abstract to provide a legal opinion on the title’s condition and marketability.
95
Question 28: The person who prepares an abstract of title for a parcel of real estate
A. writes a brief history of the title after inspecting the county records for documents affecting the title.
B. ensures the condition of the title.
C. issues a title insurance policy.
D. gives an opinion of the status of the title.
Answer: A – Writes a brief history of the title after inspecting the county records for documents affecting the title.
Reasoning for the answer: An abstractor prepares a condensed history of all recorded instruments affecting the title.
96
Question 29: A purchaser of real estate is charged with knowledge of all recorded documents, as well as with the responsibility to
A. make improvements on the property.
B. learn the rights of the parties in possession.
C. inspect the property after closing.
D. purchase additional insurance to protect the title.
Answer: B – Learn the rights of the parties in possession.
Reasoning for the answer: A purchaser must investigate the rights of parties in possession, such as tenants, to avoid potential conflicts.
97
Question 31: When a claim is settled by a title insurance company, the company acquires all rights and claims of the insured against any other person who is responsible for the loss. This is called
A. escrow.
B. abstract of title.
C. subordination.
D. subrogation.
Answer: D – Subrogation.
Reasoning for the answer: Subrogation allows the title insurance company to assume the insured’s rights to recover losses from a third party.
97
Question 30: Which statement BEST explains why instruments affecting real estate are recorded?
A. Recording gives constructive notice to the world of the rights and interests in a particular parcel of real estate.
B. Failing to record will void the transfer.
C. The instruments must be recorded to comply with the terms of the statute of frauds.
D. Recording proves the execution of the instrument.
Answer: A – Recording gives constructive notice to the world of the rights and interests in a particular parcel of real estate.
Reasoning for the answer: Recording establishes public notice of interests in property, protecting ownership rights against subsequent claims.
98
Question 32: The documents referred to as title evidence include
A. title insurance policies.
B. general warranty deeds.
C. quitclaim deeds.
D. security agreements.
Answer: A – Title insurance policies.
Reasoning for the answer: Title insurance policies serve as evidence of title and protect against losses from defects or encumbrances.
