Unit 7: Title Records- 4% Flashcards
Abstract Of Title
The condensed history of the recorded ownership of a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.
Action To Quiet Title
A court action that establishes ownership when ownership cannot be traced through an unbroken chain of title.
Actual Notice
Express information or fact; that which is known; direct knowledge.
Attorney’s Opinion Of Title
An abstract of title that an attorney has examined and has certified to be, in the attorney’s opinion, an accurate statement of the facts concerning the property’s ownership.
Certificate Of Title
A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.
Chain Of Title
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.
Constructive Notice
Notice given to the world by recorded documents. All persons are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.
Marketable Title
Good or clear title, reasonably free from the risk of litigation over possible defects.
Priority
The order of position or time. The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens.
Recording
The act of entering or recording documents affecting or conveying interests in real estate in the recorder’s office established in each county. Until it is recorded, a deed or a mortgage ordinarily is not effective against subsequent purchasers or mortgagees.
Subrogation
The right acquired by the title company to any remedy or damages available to the insured when a title company makes a payment to settle a claim covered by a policy.
Title Insurance
A policy insuring a property owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects, and matters specifically excluded by the policy.
Title Search
The examination of public records relating to real estate to determine the current state of the ownership.
Torrens System
A method of evidencing title by registration with the proper public authority, generally called the registrar ; named for its founder, Sir Robert Torrens.
Public records can help establish which of the following?
All of these B) Encumbrances C) Liens D) Ownership
Public records contain detailed information about each parcel of real estate, so they are crucial in establishing the priority of liens, establishing ownership, and giving notice of encumbrances.
All of the following may be used to prove ownership EXCEPT
A) a deed. B) title insurance. C) a certificate of title. D) a Torrens certificate.
The answer is a deed. Proof of ownership is evidence that title is marketable. A deed by itself is not considered sufficient evidence of ownership. Even though a warranty deed conveys the grantor’s interest, it contains no proof of the condition of the grantor’s title at the time of the conveyance. The grantee needs some assurance that ownership is actually being acquired and that the title is marketable. A certificate of title, title insurance, or a Torrens certificate is commonly used to prove ownership.
Extended coverage in an owner’s title insurance policy would cover which of the following?
A) Defects known to the buyer B) Changes in land use brought about by zoning ordinances C) Defects and liens listed in the policy D) Unrecorded liens not known by the policyholder
The answer is unrecorded liens not known by the policyholder. Extended coverage in an owner’s title insurance policy would include standard coverage plus defects discoverable through a property inspection, including unrecorded rights of persons in possession, an examination of the survey, and unrecorded liens not known by the policyholder.
The legal presumption that information may be obtained by an individual through due diligence is
A) constructive notice. B) none of these. C) priority. D) actual notice.
The answer is constructive notice. Because the information or evidence is readily available to the world, a prospective purchaser or lender is responsible for discovering the interest.
Which of the following is NOT covered by a standard title insurance policy?
A) Incompetent grantors B) Incorrect marital statements C) Forged documents D) Unrecorded rights of parties in possession
The answer is unrecorded rights of parties in possession. All are covered except unrecorded rights of parties in possession. These are covered by an extended coverage policy.
Which of the following is TRUE about the recording of documents?
A)
Recording real estate documents provides actual notice of their contents to the world.
B)
Recording real estate documents provides constructive notice of their contents to the world.
C)
To be recorded, real estate documents must first be registered with the court.
D)
All real estate documents must be recorded to be valid.
The answer is recording real estate documents provides constructive notice of their contents to the world. Not all real estate documents have to be recorded to be valid (i.e., an unrecorded deed can transfer title to the grantee). Recording provides constructive notice of the contents of a document to the public.
Which of the following BEST describes chain of title?
A)
It is a history of all documents and legal proceedings affecting a specific parcel of land.
B)
It is an instrument or document that protects the insured parties (subject to specific exceptions) against defects in the record of a property’s ownership.
C)
It is a report of the contents of the public record regarding a particular property.
D)
It is the examination of the record and hidden risks such as forgeries, undisclosed heirs, errors in the public records, and so on.
The answer is it is a history of all documents and legal proceedings affecting a specific parcel of land. Chain of title is the entire history, or record, of recorded transactions affecting a property, while an abstract is a summary of relevant facts found when examining the history. Title insurance is used to protect against defects in the record of a property’s ownership and is issued only after a title examination, which evaluates the public records of the property.
Standard coverage in an owner’s title insurance policy would cover all of the following EXCEPT
A) incompetent grantors. B) changes in land use brought about by zoning ordinances. C) defects found in public records. D) forged documents.
The answer is changes in land use brought about by zoning ordinances. Standard coverage in an owner’s title insurance policy would cover defects found in public records, forged documents, incompetent grantors, incorrect marital statements, and improperly delivered deeds. It would not include changes in land use brought about by zoning ordinances.
A title that has no defects that could carry over as a problem for the next property owners is called
A) an encumbered title. B) a marketable title. C) a suit to quiet title. D) a certified title.
The answer is a marketable title. Most contracts state that the seller is responsible for providing marketable title to the property. The term marketable means a title that has no defects that could carry over as a problem for the new owner at whatever time the new owner decides to sell.
All of the following would be revealed by a title search EXCEPT
A) encroachments. B) mechanic’s lien. C) property taxes. D) mortgage.
The answer is encroachments. A title search will find items recorded in the public record. Encroachments are only able to be discovered through a physical inspection of the land.
A property with encumbrances that will outlast the closing
A)
cannot be sold.
B)
can be sold only if title insurance is provided.
C)
cannot have a deed recorded without a survey.
D)
can be sold if a buyer agrees to take it subject to the encumbrances.
The answer is can be sold if a buyer agrees to take it subject to the encumbrances. A buyer can agree to purchase property with existing encumbrances, such as a lien that the purchaser will assume.
A property buyer should object to any defects in the title to the property
A)
within one year of the transfer of title.
B)
before acceptance of the deed.
C)
no later than 90 days of the recording of the deed from the seller.
D)
before recording the deed from the seller.
The answer is before acceptance of the deed. Once a buyer has accepted a deed with unmarketable title, the only available legal recourse may be to sue the seller under any covenants of warranty contained in the deed.
Public records are crucial in establishing all of the following EXCEPT
A) encumbrances. B) liens. C) ownership. D) adverse possession.
The answer is adverse possession. Public records contain detailed information about each parcel of real estate, so they are crucial in establishing the priority of liens, establishing ownership, and giving notice of encumbrances.
Which of the following is NOT covered by an extended title insurance policy?
A) Rights of parties in possession B) Certain unrecorded liens C) Defects and liens listed in the policy D) Defects that may be discovered by an inspection
The answer is defects and liens listed in the policy. A title company will not cover against defects that appear in a title search. These are included in the policy as exclusions.
Mortgagee title policies protect which parties against loss?
A) Buyers and lenders B) Lenders C) Sellers D) Buyers
The answer is lenders. A mortgagee title policy protects the mortgagee—the lender. An owner’s policy protects the owner, heirs, and devisees.
A purchaser went to the county building to check the recorder’s records, which showed that the seller was the grantee in the last recorded deed and that no mortgage was on record against the property. The purchaser may assume which of the following?
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) No one else is occupying the property.
The answer is the seller did not mortgage the property. The fact that no mortgage is on record against the property indicates, with a reasonable degree of certainty, that the seller did not mortgage the property.
The encumbrances and defects that will NOT be insured against under a title insurance policy are included in
A) the list of exclusions. B) the nonexclusionary clause. C) the citation clause. D) the schedule of defects.
The answer is the list of exclusions. Title insurance does not offer guaranteed protection against all defects. The policy names uninsurable losses called exclusions.
A deed that has not been recorded will NOT provide
A) an essential element. B) constructive notice. C) actual notice. D) competent parties.
The answer is constructive notice. Properly recording documents in the public record serves as constructive notice to the world of an individual’s rights or interest, as does the physical possession of a property. Because the information or evidence is readily available to the world, a prospective purchaser or lender is responsible for discovering the interest. A deed that has not been recorded lacks constructive notice, which is also known as legal notice.
Which of the following would create a cloud on title?
A) A slight error in the legal description B) All of these C) Misspelling of a grantor’s name D) An incorrect date
The answer is all of these. A cloud on title can be created by a misspelling of a grantor’s name, an incorrect date, or a slight error in the legal description.
A cloud on the title to a parcel of real estate is
A)
a gap in the chain of title that can be cured by filing a notice of cloud on the title.
B)
removable by any previous owner of the property.
C)
usual and no hindrance to transferring title to the property to a new owner.
D)
resolved by an action to quiet title.
The answer is resolved by an action to quiet title. Legal action might be required if there is a gap in the chain of title, as may happen if a grantor acquired title under one name and conveyed it under another name. Evidence can be presented in court to show that the grantee under the earlier deed was the same person who was the grantor in a later deed.
A standard title search would reveal all of the following EXCEPT
A) parties in possession. B) recorded easements. C) a deed restriction of record. D) property tax liens.
The answer is parties in possession. Title searches use public records to find all items that have been recorded. Items that are typically recorded are tax liens, deed restrictions, easements, and mortgages. The parties in possession of the property would be found through a physical inspection of the property.
Evidence of marketable title includes which of the following?
A) Affidavit B) Trust deed C) Warranty deed D) Title insurance policy
The answer is title insurance policy. Proof of ownership is evidence the title is marketable, and title insurance provides the best defense of title.
An owner decides to sell property and discovers that there is a lien on the title for a swimming pool that the owner paid off 10 years ago. The pool company is out of business. What is the owner to do?
A) None of these are possible. B) The seller could bring a suit to quiet title. C) The owner will not be able to sell the property. D) The buyer will have to pay off the lien.
The answer is the seller could bring a suit to quiet title. A suit to quiet title can eliminate a cloud on title through court action.
Who is usually responsible for providing marketable title to the property?
A) The seller B) The title company C) The buyer D) The mortgage company
The answer is the seller. Most contracts clearly state that the seller is responsible for providing marketable title to the property.
A policy of title insurance typically does NOT cover
A) forged documents. B) incompetent grantors. C) zoning changes. D) incorrect marital statements.
The answer is zoning changes. The standard policy of title insurance will cover defects found in public records, forged documents, incompetent grantors, incorrect marital statements, and improperly delivered deeds, but not defects known to the buyer or changes in land use brought about by zoning ordinances.
Which of the following would cause a cloud on title?
A) Gap in the chain of title B) Missing the name of the grantor C) All of these D) A recorded lien that was paid off but not released
The answer is all of these. In more serious cases, such as a missing name of the grantor or a gap in the chain of title, it may be necessary to file a suit to quiet title.
A written summary of the history of all conveyances and legal proceedings affecting a specific parcel of real estate is called
A) an adjustment of title. B) a title insurance policy. C) a certificate of title. D) an abstract of title.
The answer is an abstract of title. An abstract of title summarizes the various events and proceedings that affected the title throughout its history.
The commitment to issue a title policy includes all of the following EXCEPT
A) estate or interest covered. B) full sale price of the property. C) name of the insured party. D) legal description.
The answer is full sale price of the property. The commitment to issue a title policy includes the name of the insured party, legal description of the real estate, estate or interest covered, conditions and stipulations under which the policy is issued, and a schedule of all exceptions, including encumbrances and defects found in the public records and any known unrecorded defects. It does not include the full sale price of the property.
A title company will NOT cover against defects
A) that appear in a title search. B) caused by incompetent grantors. C) caused by forged documents. D) resulting from an incorrect marital statement.
The answer is that appear in a title search. A title company will not cover against defects that appear in a title search. Defects and liens listed in the title policy are included in the policy as exclusions.
A mortgagee received a title insurance policy on the property a buyer is pledging as security for the mortgage loan. Which of the following is TRUE?
A)
The amount of coverage increases as the borrower grows older.
B)
The policy guarantees that the buyer’s equity will be protected.
C)
The amount of coverage is commensurate with the loan amount.
D)
The policy is issued for the benefit of the buyer.
The answer is the amount of coverage is commensurate with the loan amount. A lender’s policy is used for the benefit of the mortgagee. The amount of coverage depends on the amount of the mortgage loan and is decreased as the loan balance is reduced.
Which of the following are traditionally covered by a standard title insurance policy?
A)
Changes in land use because of zoning ordinances
B)
Unrecorded liens not known to the policyholder
C)
Improperly delivered deeds
D)
Unrecorded rights of persons in possession
The answer is improperly delivered deeds. The rights of persons in possession (prior to purchase) are not covered by the basic title insurance policy, but they are covered by extended coverage policies. Changes in land use related to zoning are not covered in any type of title insurance. Standard coverage will protect against improperly delivered deeds.
