Unit 6: Transfer + Recording of Title Flashcards
What is title insurance?
Protects buyers and lenders against financial loss. Provides clear and marketable title
What is the lender’s policy?
Offers protection worth amount of mortgage loan balance
What happens in the event of a claim?
Title company will pay debt, or take claimant to court. If title company pays debt, it’ll seek reimbursement from who caused loss
What does a title insurance policy exception include?
Claims made by person leasing property, mechanic/other liens filed after policy issued, disclosed + undisclosed easement and right of way, taxes, and special assessments
What does a title insurance company do?
Perform public record search in attempt to discover potential claims against property
What is a title abstract (abstract of title)?
Summary of property’s title history. Attorney and title companies who prepare abstract use public records to identify title history
What is the chain of title?
Establishes path of property ownership from first to current owner
What is a cloud of title?
Any encumbrance that prevents seller from a clear and marketable title
How can a foreclosure/inheritance claim be solved?
Having owner sign quitclaim deed, which release any claim they have on property
How can a cloud be resolved?
Through quiet title suit, owner goes to court to remove claims on property
What are the 5 common title issues?
Errors in public records, missing heirs, forgeries, unknown liens, survey/boundary issues, conflicting wills
When should a licensee encourage a buyer to opt for owner’s extended title coverage for all distressed property sales?
Properties may not be in ideal conditions, unpaid taxes, liens/encumbrance require resolution, more complicated transaction paperwork, need for additional experts ($$), individual state redemption process permit previous owners to take property back, closing can be lengthy
Title issues with REO:
Reverts to lender due to foreclosed sale, may be subject to buyer’s right of redemption, title issues are less common, closing may be lengthy
What is a deed?
Written and signed legal instrument of conveyance. Establishes proof of ownership and document that legally transfers (convey) title to real property
What is voluntary alienation?
When property is willingly sold or conveyed
What is involuntary alienation?
When property is seized by court order or foreclosure
What are the essential elements of a deed?
Is specifically named and identified, includes grantee name, act of conveyance, named consideration, legal description, any limitation/subject to clauses, Habendum clause, and grantor signature
What does the act of conveyance start with?
” does hereby bargain, grant, deed, and convey”
What does named consideration start with?
“for one dollar” or “for good and valuable consideration”
What is Habendum clause?
Defines type of interest and rights grantee will have
What is the process of ownership transfer?
Ownership transfer after grantor (seller) signs deed, and has been acknowledged. Grantor delivers deed to buyer, and they must accept
What are the common deed types?
General warranty, special warranty and quitclaim deeds
what is a general warranty?
Called full covenant and warranty deed; offers greatest warranty to buyers
What are the general warranty’s 6 covenants?
Covenant of seisin, right to convey, against encumbrance, quiet enjoyment, further assurance, and warranty
What is covenant of seisin?
Grantor holds title to property
What is covenant of right to convey?
Grantor has legal capacity to convey title and has legal title to property
What is covenant against encumbrance?
The grantor assures the grantee that no encumbrance exist other than identified in public records or deed itself
What is covenant of quiet enjoyment?
Grantor assures that grantee’s use and enjoyment of property won’t be burdened because of a title defect
What is covenant of further assurance?
Grantor’s promises to provide any additional assurances that grantee reasonably requires and will correct any title defect
What is covenant of warranty?
Most important covenant, grantor agrees to warrant and defend title against lawful claims of others
What is a special warranty deed?
Also called bargain and sale deed, typically warrants only against title defects acquired during grantor’s ownership
Deeds of gifts and dedication:
Property owners can choose to voluntarily convey property by deed of gift + dedication; recipient cannot enforce warranties against grantor + owner donations property for common use
What does interstate mean?
people who die without a will
Who is the appointed executor?
Carries out will provisions when individual dies testate
What does testate mean?
When a person dies with a will
What is a devise?
Gift of real property
What is devisor?
Person who writes the will
What is the devisee?
A recipient
What is a bequest/legacy?
Gift of personal property
What is a legatee?
The recipient
What are the 3 common will type?
Statutory, holographic and oral
What is statutory will?
Used for straightforward situations; may be checkboxes/fill in blank
What are holographic wills?
handwritten and unwitnessed, may/may not be recognized as a legal will
What are oral will?
Provisions are spoken to witnesses; may only be used under certain circumstances/may or not be recognized as legal will
What is ad valorem?
Based on property assessed value
