Unit 4: Recordation, Title Insurance, and Settlement

Question 0

Title search

Answer 0

Done by attorney or title insurance company to trace ownership of a parcel of land to the beginning of it’s recorded history

Question 1

Priority of recorded instrument

Answer 1

Determined by date of recording

Question 2

Lis pendens (litigation pending)

Answer 2

Recorded notice stating that a pending lawsuit may affect title to a particular property

Question 3

Document that summarizes all recorded interests affecting title to a given parcel of land

Answer 3

Abstract of title

Question 4

Chain of title

Answer 4

All documents that comprise the history of the title

Question 5

Title opinion

Answer 5

Given after attorney examines the abstract

Does NOT guarantee marketable title

Question 6

Title insurance

Answer 6

Protection against incomplete or defective records of title found after closing

Does not protect against encroachments

Mortagee’s title insurance protects lender

Paid once, at the time of issuance

Covers errors in title examination, errors in the abstract, errors in the public record (misfiled docs) , forgery, incompetency , misrepresented marital status, improperly prepared deeds

Question 7

Marketable title

Answer 7

Free from reasonable doubt as to its validity

Question 8

Exception

Answer 8

A problem not coveted by standard or extended title insurance

Question 9

Prorated item paid in advance

Answer 9

Debit it the buyer

Question 10

RESPA

Answer 10

Requires lender to disclose all settlement costs in a void faith estimate no later then 3 days after a loan application

Question 11

Prorated item paid in arrears

Answer 11

Credit to the buyer

Question 12

New lien on settlement statement

Answer 12

Credit to the buyer

Question 13

All loans (owner financing, loan assumption, new mortgage)

Answer 13

Credit to the buyer

Question 14

Recording real estate documents

Answer 14

Provides constructive notice of their contents to the world

Policies and procedures that regulate records are established by state laws

Creates priority of the documents based on dare/time recorded

Most states require notarization

Question 15

Real Estate Settlement Procedures Act (RESPA) requires lender supply

Answer 15

HUD-1

For only residential properties

Question 16

Recording process

Answer 16

1) note date/time
2) assign recording number
3) copy document into public record
4) list document in grantor and grantee indexes
5) return original to indicated party

Question 17

Actual notice

Answer 17

Inspect property for visible claims

Question 18

Constructive notice

Answer 18

Inspect public records

Question 19

Due diligence process

Answer 19

Buyer expected to inspect or gave someone inspect both the property (inspection) and public records (title search)

Question 20

Subordination

Answer 20

Clause in mortgage / deed of trust which the lender permits a subsequent mortgage to take priority

Allows mortgages to maintain their original position

Question 21

Title insurance: extended coverage

Answer 21

Protects against problems that are not a matter of public record but would be discovered by inspection of property

• adverse possession issues
• encroachments

Question 22

Good faith estimate (GFE)

Answer 22

Used at beginning of loan process to provide buyers with an estimate of total settlement costs (including loan origination and discount points) that will be needed at settlement

Has to be provided within 3 business days after application

Lender fees cannot increase

Fees for services that lender requires but allows borrower to select cannot increase more then 10%

Question 23

HUD-1

Answer 23

Reflects good faith estimate but represents final numbers used when closing the loan

Question 24

Escrow

Answer 24

May not have more then 2 months of additions, fees plus west is owed

Escrow agent/holder is disinterested party who assists in carrying out the transaction according to terms in purchase contract

Question 25

Lenders and title companies

Answer 25

Regulated, and real estate licenses are impacted