Unit 6: Transfer of Title- 6%

Question 1

Acknowledgment

Answer 1

A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.

Question 2

Adverse Possession

Answer 2

The actual, open, notorious, hostile, and continuous possession of another’s land under a claim of title. Possession for a statutory period may be a means of acquiring title.

Question 3

Bargain And Sale Deed

Answer 3

A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed.

Question 4

Deed

Answer 4

A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

Question 5

Deed Of Trust

Answer 5

See trust deed.

Question 6

Devise

Answer 6

A transfer of real property by will. The decedent is the devisor, and the recipient is the devisee.

Question 7

General Warranty Deed

Answer 7

A deed in which the grantor fully warrants good, clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.

Question 8

Grantee

Answer 8

A person who receives a transfer of real property from a grantor.

Question 9

Granting Clause

Answer 9

Words in a deed of conveyance that state the grantor’s intention to convey the property at the present time. This clause is generally worded as “convey and warrant”; “grant”; “grant, bargain, and sell”; or the like.

Question 10

Grantor

Answer 10

The owner transferring title to or an interest in real property to a grantee.

Question 11

Habendum Clause

Answer 11

That part of a deed beginning with the words “to have and to hold,” following the granting clause and defining the extent of ownership the grantor is conveying.

Question 12

Intestate

Answer 12

The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent’s heirs, as provided in the state law of descent.

Question 13

Involuntary Alienation

Answer 13

See alienation

Alienation Clause

The clause in a mortgage or deed of trust stating that the balance of the secured debt becomes immediately due and payable at the lender’s option if the property is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lender’s approval.

Question 14

Probate

Answer 14

A legal process by which a court determines who will inherit a decedent’s property and what the estate’s assets are.

Question 15

Quitclaim Deed

Answer 15

A conveyance that transfers whatever interest the grantor has in the specified real estate, without warranties or obligations.

Question 16

Reconveyance Deed

Answer 16

A deed used by a trustee under a deed of trust to return title to the trustor.

Question 17

Special Warranty Deed

Answer 17

A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of the grantor’s tenure and ownership of the property and not against defects existing before that time, generally using the language, “by, through, or under the grantor but not otherwise.”

Question 18

Testate

Answer 18

Having made and left a valid will.

Question 19

Testator

Answer 19

A person who has made a valid will. A woman might be referred to as a testatrix, although testator can be used for either a man or a woman.

Question 20

Title

Answer 20

(1) The right to ownership or the ownership of land. (2) The evidence of ownership of land.

Question 21

Transfer Tax

Answer 21

Tax stamps required to be affixed to a deed by state and/or local law.

Question 22

Trustee’s Deed

Answer 22

A deed executed by a trustee conveying land held in a trust. A trustee’s deed is used to transfer title to the beneficiary of the trust or the buyer at a trustee’s sale.

Question 23

Voluntary Alienation

Answer 23

See alienation.

Question 24

Will

Answer 24

A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.

Question 25

The deed promising that the grantor holds title to the identified property and has not encumbered the property during the time it was held by the grantor is

Answer 25

the special warranty deed

The special warranty deed promises that the grantor will defend the title against the grantor’s actions, but not those of earlier owners of the property.

Question 26

The document used to convey ownership to real property is

Answer 26

a quitclaim deed.

Deeds transfer real property. Both a title policy and abstract with title opinion are used to verify and protect against defects of title.

Question 27

The document that acts as security for a promissory note is

Answer 27

a deed of trust.

A deed of trust conveys title to a trustee, who holds it as security for a promissory note. Conveyance or grant deeds, such as a general warranty or quitclaim, transfer title to property.

Question 28

A deed contains a promise that the title conveyed is good and a promise to obtain and deliver any documents necessary to ensure good title. This deed contains an example of which covenant?

Answer 28

Further assurances

Any promise to obtain documents to make the title good is the covenant of further assurance. The covenants of quiet enjoyment, seisin, and warranty forever are not addressed.

Question 29

A person who has died without a will has died

Answer 29

intestate

When a property owner dies intestate, title to the property will pass to the decedent’s heirs, as provided in the state laws of descent.

Question 30

To be valid, a deed must include all of the following EXCEPT

Answer 30

tax

Tax is not included in the deed. Typically, a transfer tax, if any, is imposed by the county in which the property is located at the time the deed is recorded. 38.

Question 31

What is the purpose of probate?

Answer 31

Distribute all assets correctly, Account for all assets that exist, Satisfy the decedent’s debts

The answer is all of these. The purpose of probate is to see that the assets are distributed correctly, that all assets are accounted for, and that the decedent’s debts are satisfied.

Question 32

A resident of Denver bought acreage in a distant county, never went to see the acreage, and did not use the ground. An artist moved a mobile home onto the land, had a water well drilled, and lived there for 22 years. The artist may become the owner of the land if the artist is in compliance with the state law regarding

Answer 32

adverse possession.

Adverse possession is (hostile) possession of real estate without the permission of the owner and contrary to the owner’s best interests. If it continues in an open, conspicuous (notorious) way for the time set by statute (the statutory period), the adverse possessor may take legal action to be declared the owner on the basis of all these facts.

Question 33

When a corporation transfers ownership of property, the deed must be signed by

Answer 33

an authorized officer.

Proper authority for the sale must be given by bylaws or by a resolution passed by the board of directors. Shareholders are not necessarily officers, nor are brokers. A grantee does not sign a deed.

Question 34

A deed contains a guarantee that the grantor will compensate the grantee for any loss resulting from the title’s failure in the future. This is an example of which covenant?

Answer 34

Warranty forever

he grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future in the covenant of warranty forever.

Question 35

A valid will devises a decedent’s real estate after payment of all debts, claims, inheritance taxes, and expenses through

Answer 35

the court action known as probate

For the title to pass to the devisees, state laws require that on the death of a testator, the will must be filed with the court and probated. Probate is the legal procedure verifying the validity of a will and accounting for the decedent’s assets.

Question 36

Title is NOT considered transferred until the deed is

Answer 36

delivered to and accepted by the grantee.

The most complete answer is delivered to and accepted by the grantee during the grantor’s lifetime.

Question 37

Generally, where does a probate proceeding involving real property take place?

Answer 37

In both the county where the decedent resided and the county in which the property is located

There will be two probates conducted: one in the county where the decedent resided and another in the county where the real estate is located.

Question 38

Title to real estate may be transferred during a person’s lifetime by

Answer 38

involuntary alienation.

Transfer of title by devise (will), descent (death intestate), or escheat (for lack of a will and lack of heirs) all occur after death. Involuntary alienation, such as condemnation, foreclosure sale, or tax sale, can occur during a person’s lifetime.

Question 39

An important purpose of a living trust is to

Answer 39

avoid having property in the trust go through probate.

On the trustor’s death, the trust need not go through a probate proceeding because title automatically passes to the beneficiary named in the trust. The living trust has no effect on the value of the estate for estate tax purposes, however.

Question 40

Which of the following is FALSE about probate?

Answer 40

The laws of probate are set at the national level.

Estate taxes must be paid before any distribution. The laws of each state govern the probate proceedings. Property held in tenancy by the entirety passes immediately.

Question 41

All of the following are true of the holder of a fee simple absolute estate EXCEPT

Answer 41

the estate terminates upon death.

Fee simple absolute estates potentially last forever.

Question 42

Probate is a formal judicial process that does all of the following EXCEPT

Answer 42

see that assets are distributed correctly, but only if the deceased was unmarried.

Married couples, as well as unmarried individuals, normally are subject to probate rules. The use of living trusts by spouses can postpone probate until the second spouse dies. Probate confirms the validity of a will, determines the precise assets, and identifies to whom those assets will pass.

Question 43

A deed would be valid without

Answer 43

a competent grantee.

While the grantor must be legally competent, the grantee could be legally incompetent—for example, a minor (provided a guardian or other person with legal authority over the property of the incompetent person accepts the deed on that person’s behalf.)

Question 44

In MOST states, a written will must be signed by its testator

Answer 44

before two or more witnesses, who must also sign the document.

Question 45

To be valid, a deed must name

Answer 45

a grantee.

The person to whom the property is being conveyed must be readily identified from the deed itself.

Question 46

Under the covenant of quiet enjoyment, a grantor

Answer 46

ensures that the title will be good against the title claims of third parties.

Quiet enjoyment means freedom from claims of third parties—persons other than grantor and grantee.

Question 47

A sale to satisfy delinquent tax or mortgage liens is an example of

Answer 47

involuntary alienation

A sale to satisfy delinquent tax or mortgage liens is an example of involuntary alienation.

Question 48

Which type of deed is used by a grantor whose interest in the real estate may be unknown?

Answer 48

Quitclaim deed

A quitclaim deed transfers whatever interest the grantor may have. If the grantor has no interest, the grantee will acquire nothing and have no right of warranty claim against the grantor.

Question 49

In front of witnesses, a property owner says to a friend, “I never made a will, but I want you to have my property when I die.” If the friend becomes the owner of the property, it is because the state recognizes what kind of will?

Answer 49

Nuncupative

A nuncupative will is an oral will. A holographic will is completely handwritten. A testamentary trust is established by will after the owner’s death. Probate is the process of determining the validity of the will and distributing the assets of the estate

Question 50

When a person dies, ownership of real estate

Answer 50

passes immediately.

When a person dies, ownership of real estate immediately passes either to the heirs by descent or to the persons named in the will. Before full title and possession of the property may be taken, the estate must go through a judicial procedure called probate.

Question 51

A 15-year-old recently inherited a parcel of real estate and has decided to sell it. If the 15-year-old executes a deed conveying the property to a purchaser, such a conveyance would be

Answer 51

voidable.

Real estate contracts entered into by minors are generally voidable by the minor until the minor reaches the age of majority—18 in most states—or shortly thereafter.

Question 52

A bargain and sale deed contains how many express warranties?

Answer 52

0

A bargain and sale deed contains no express warranties against encumbrances; however, it does imply that the grantor holds title and possession of the property.

Question 53

In a special warranty deed, the grantor promises

Answer 53

to defend the title against any encumbrances during the grantor’s period of ownership.

A special warranty deed promises that while the seller owned the property, the seller did not cloud the title. The seller only defends against clouds on title that may have occurred during the seller’s ownership period.

Question 54

When conveying interests in real estate using a quitclaim deed, the extent of promises given by the grantor to the grantee are

Answer 54

none.

A quitclaim deed gives no warrants to the grantee. Claims during the grantor’s ownership would be covered by a special warranty deed. A general warranty deed provides the same warranties as a special warranty deed but also covers claims made before the grantor’s ownership of the property. No deed requires the grantor to supply title insurance.

Question 55

A bank wants to convey title to a foreclosed property but does not want to give any title warranties or have any future claims or liabilities. Which type of deed should the bank use?

Answer 55

Quitclaim deed

A quitclaim deed conveys the grantor’s interest but contains no warranty that the grantor even has any interest.

Question 56

In one state, the transfer tax is $0.80 per $500 or fraction thereof. There is no tax charged on the first $500 of the price. What tax must the seller pay if the property sells for $329,650?

Answer 56

$527.20

The seller must pay $527.20:

$329,650 – the $500 = $329,150

$329,150 ÷ $500 = 658.3, rounded up to 659 659 × $0.80 = $527.20

Question 57

The grantee receives greatest protection with what type of deed?

Answer 57

General warranty

In the general warranty—often just called warranty—deed, the grantor makes more promises and gives the grantee more covenants than in any other deed

Question 58

The process of probate is

Answer 58

a formal judicial process.

Probate is a legal procedure for verifying the validity of a will and accounting for the decedent’s assets. The process can take several months to complete.

Question 59

All of these are necessary to a valid deed EXCEPT

Answer 59

the grantee’s signature.

The grantee does not need to sign the deed, because the grantee receives the property.

Question 60

A modification to a will is called

Answer 60

a codicil

Any modification to a previously executed will is contained in a separate document called a codicil. Additional agreements attached to an agreement of sale are addenda; an amendment is a change to the existing content of a contract. Probate is the process of determining the validity of a will.

Question 61

Transfer of property by foreclosure of a mortgage loan is

Answer 61

involuntary transfer.

Involuntary transfers are usually carried out by operation of law—such as by condemnation, foreclosure of a mortgage loan, or a sale to satisfy delinquent tax or mortgage liens.

Question 62

A grantor conveys property by delivering a deed. The deed contains five covenants. This is MOST likely

Answer 62

a general warranty deed.

A general warranty deed contains covenants of seisin, further assurance, quiet enjoyment, freedom from encumbrances, and warranty forever.

Question 63

A sale to satisfy delinquent tax or mortgage liens is an example of

Answer 63

involuntary alienation.

Question 64

Title to real estate means the right to or ownership of the land and represents the owner’s

Answer 64

bundle of legal rights and also serves as evidence of ownership.

Question 65

P signed a deed transferring ownership of P’s house to Q. To provide evidence that P’s signature was genuine, P executed a declaration before a notary. This declaration is known as

Answer 65

an acknowledgment.

P gave this acknowledgment as to the validity and voluntary nature of P’s signature to a notary. The notary took P’s acknowledgment and attached a seal.

Question 66

For a deed to be recorded, MOST states require that it be

Answer 66

acknowledged.

Having the deed notarized or acknowledged shows that the grantor freely signed the document.