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Real Estate I > Unit 7: Title Records > Flashcards

Unit 7: Title Records Flashcards

1
Q

What do public records contain?

A

Public records contain the detailed information about each parcel of real estate by county.

Public records contain information regarding deeds, encumbrances, liens, judgments, legal descriptions and other documents including covenants and plat maps.

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2
Q

Who maintains the public records in Colorado?

A

In Colorado, public records are maintained by each County Clerk and Recorder’s office.

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3
Q

What do title companies do?

A

Title companies conduct searches of recorded documents prior to issuing a title insurance policy.

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4
Q

What is recording?

A

Recording is the act of adding documents to the public record.

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5
Q

States require that any written document…

A

that affects any estate, right, title, or interest in land must be recorded in the county where the land is located to serve as public notice.

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6
Q

How is a record recorded?

A

Has to be properly executed, witness required, and company required recording fees.

Grantor has to sign it

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7
Q

What are the Three Types of Notice?

A

Constructive Notice
Actual Notice
Inquiry Notice

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8
Q

Constructive Notice:

A

The legal presumption that information may be obtained by an individual through diligent inquiry.

Recording documents in the public record serves as constructive notice to all regarding an individual’s interest in a property.

Physical possession of a property also serves as constructive notice of ownership interest.

It is the responsibility of purchasing parties and lenders etc to perform due diligence with respect to discovering ownership interest.

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9
Q

Actual Notice:

A

Actual notice means that not only is the information has been provided but that they actually know the information.

If someone has investigated the ownership of a property by viewing the public record and inspected the property, they have actual notice.

Actual knowledge is also called direct-knowledge.

If it can be proven that an individual had actual notice of information, he or she cannot make a claim of lack of constructive notice (an unrecorded deed) to justify a claim.

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10
Q

Inquiry Notice:
Example-
“A client is interested in purchasing a vacant lot and identifies a dirt road across the lot when they view the lot, they have a duty to perform further due diligence into the lot and the road.”
“A property borders what appears to be open space. The buyer should perform due diligence to determine if the land is actual open space or zoned for future development.”

A

Inquiry notice is the notice the law presumes a reasonable person would obtain by making further inquiry into a property.

You ask the question/look into it.

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11
Q

What is priority?

A

Priority refers to the right in time.

How a court rules in any particular case may vary depending on the facts which involve which party recorded a document first, which party is in possession, which party had constructive or actual notice.

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12
Q

What refers to the right in time?

A

Priority

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13
Q

What happens to unrecorded documents?

A

Special assessment and property tax liens take time to appear on the public record. Therefore, it is important to consult with the county assessor office to determine that the taxes on a property are current and if any special assessments are due.

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14
Q

Title companies only provide information regarding items that are of public record. Not all pertinent information is of the public record when the information is needed and therefore additional due diligence is required. True/False?

A

True

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15
Q

What is the Chain of Title?

A

The chain of title is a record of the properties ownership from the earliest owners.

If a property has an unbroken chain of title, it is possible to use the deeds to link one owner to the next.

The chain of title does not include information about liens, encumbrances and other encroachments as they are not directly related to the ownership of the property.

The gap in the title is called a “cloud on the title” and would need to be resolved through a court action called a suit to quiet title.

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16
Q

If property has an unbroken chain of title, it is..

A

possible to use the deeds to link one owner to the next.

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17
Q

What is a suit to quiet title?

A

A court action when:

The gap in the title is called a “cloud on the title” and would need to be resolved through a court action

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18
Q

How do you fix a gap in title?

A

Gaps in title can be the result of a deed that was conveyed with the improper name, or a forged deed. Many times a quitclaim deed is all that is needed to resolve the cloud on the title.

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19
Q

What is a Title Search:

A

A title search is an examination of all of the public records to determine whether any defects exist in the chain of title.

A title examiner examines the records of conveyances of ownership, beginning with the present owner.

The title examiner then traces the title backward to its origin (a specified period of time up to 60 years depending on state statute).

The time beyond which the title must be searched is limited in states that have adopted the Marketable Title Act (which includes Colorado).

The Marketable Title Acts extinguish certain interests and cures certain defects arising before the rood of the title – the conveyance that establishes the source of the chain of title (the root of the title).

Therefore, it is only necessary to establish the title from the current owner back to the “root”.

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20
Q

What is the Marketable Title Acts?

A

The Marketable Title Acts extinguish (eliminates) certain interests and cures certain defects arising before the rood of the title – the conveyance that establishes the source of the chain of title (the root of the title).

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21
Q

Does the Marketable Title Act apply to Colorado?

A

Yes

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22
Q

A title examiner can trace the title backwards to the origin up to:

A

a specified period of time up to 60 years depending on state statute.

23
Q

What do the title examiners do?

A

The title examiner searches other public records to identify wills, judicial proceedings, and other encumbrances that may affect the title.

These other encumbrances would include a variety of taxes, special assessments and other recorded liens.

24
Q

In Colorado, it is customary for a seller to provide and pay for a title insurance policy for the buyer. The cost of the policy varies depending on the county and the purchase price.

A

True

25
Q

What is an Abstract of Title:

A

A summary of what a title search finds.

An abstract of Title is a summary report of what the title search found in the public record.

All recorded liens and encumbrances are included with their current status.

An abstract of title will provide a list of all the public records examined as evidence of the scope of the search.

26
Q

What is the job of an Abstractor?

A

An abstractor is the professional that prepares the abstract of title report.

An abstractor searches all public records, then summarizes the various events and proceedings that affected the title through its history.

An abstract of title begins with the original grantor (or the root), then provides a chronological list or recorded instruments.

27
Q

What is the Marketable Title

A

Most real estate contracts, including the Colorado approved purchase and sale contract, requires the seller to deliver good and marketable title to the buyer at closing.

28
Q

In order for a title to be marketable it must:

A
  1. Disclose no serious defects and not depend on doubtful questions of law or fact to prove its validity.
  2. Not expose the purchaser to the hazard of litigation or threaten the quiet enjoyment of the property.
  3. Convince a reasonably well-informed person and 3. Convince a reasonably well-informed person and with knowledge of the facts and their legal significance, that he or she could sell or mortgage the property at a later time.
  4. A buyer cannot be forced to accept a conveyance that is materially different from the one bargained for in the sales contract.
  5. In Colorado, the buyer must make any objections to the title prior to the objection deadline identified in the contract.
  6. Once the buyer accepts the deed, if the title is unmarketable, the only recourse available is to sue under the covenants of the deed depending upon they type of deed that was conveyed.
  7. In Colorado, the contract will stipulate whether title insurance or an abstract of title is to be provided. In addition, the contract can stipulate that all documents related to and identified in the title commitment are to be provided to the buyer and their agent automatically during the title review process.
  8. The listing broker is responsible for ensuring that all parties receive the required title documents before the title deadline stated in the contract.
29
Q

What is a Proof of Ownership?

A 
Proof of ownership is evidence that title is marketable  
To prove ownership the buyer receives:
1. A Certificate of Title
2. Title Insurance
3. A Torrens Certificate
30
Q

Is a warranty deed Proof of Ownership?

A

While a warranty deed conveys the grantor’s interest in ownership, it contains no proof of the condition of the grantor’s title at the time of the conveyance.

(It is some kind of proof but it isn’t enough.)

31
Q

What is the Certificate of Title?

A

A statement of opinion of the title’s status on the date the certificate is issued.

A certificate of title is not a guarantee of ownership.

A certificate of title certifies the condition of the title based on the examination of the public records (title search).

Although a certificate of title is used as evidence of ownership, it is not perfect.

32
Q

Is the certificate of title a guarantee ownership?

A

No

33
Q

What is the person who prepares the certificate of title liable for?

A

The person who prepares the certificate of title is liable for any negligence in preparing the certificate of title.

34
Q

What is a Title Insurance:

A

Title insurance is a contract in which the policy holder is protected from losses arising from defects in the title.

Based on a review of the public record, a title company determines if the title is insurable and if it is a title insurance policy is issued.

Title insurance insures against losses which occur because of events in the post in contrast to the typical insurance policy that insures against events occurring in the future.

Title insurance is considered the best defense of the title.

35
Q

What is the best defense of the title?

A

Title insurance is considered the best defense of the title.

A title insurance company will defend any lawsuit based on an insurable defect and pay claims if the title proves to be defective.

36
Q

What do the preliminary reports title report include?

A
  1. the name of the insured party
  2. the legal description of the real estate
  3. the estate or interest covered
  4. conditions and stipulations under which the policy is issued
  5. a schedule of all exceptions, including encumbrances and defects found in the public records and any known unrecorded defects.
37
Q

When is the premium for the title insurance policy paid?

A

The premium for the title insurance policy is paid at closing.

38
Q

What is the maximum loss that the title company is liable for?

A

The maximum loss for which the title company may be liable is the face amount of the policy (unless extended by an inflation factor)

39
Q

When a title company makes a payment to settle a claim covered by a policy,

A

the company generally acquires the right to any remedy or damages available to the insured.

40
Q

What is the coverage title policy?

A

The standard coverage title policy normally insures the title as it is known from the public records.

The standard policy insures against hidden defects such as forged documents, conveyances by incompetent grantors, incorrect marital statements, and improperly delivered deeds.

41
Q

Who provides the extended coverage for coverage title policy?

A

Extended coverage is provided by the American Land Title Association (ALTA policy) includes the protections of a standard policy plus additional protections.

An extended policy will protect the purchase against rights of persons in possession, examination of a survey, and certain unrecorded liens.

42
Q

A title policy will name certain uninsurable losses called ______?

A

Exclusions

43
Q

What do Exclusions include?

A

Exclusions include zoning ordinances, restrictive covenants, easements, water rights, and current taxes and special assessments.

44
Q

Types of Title Policies:

A

Title insurance policies insure the named party on the policy and include:

  1. Owner’s policy
  2. Lender’s policy
45
Q

What is the Owner’s Policy:

A

An owner’s policy is issued for the benefit of the new purchaser (buyer) and his or her heirs and devisees.

The amount of the policy is generally based on the contract price for the home.

It is customary in Colorado for the seller to choose the title company and pay for the owner’s policy.

46
Q

Is it required in Colorado for the seller to choose the title company and pay for the owner’s policy.

A

It is Customary. They choose the title company that pays for the owner’s policy

47
Q

What is the Lender’s Policy:

A

A lender’s policy is issued for the benefit of the mortgage lenders.

The coverage for the lender’s policy is determined by the amount of the mortgage loan.

A lender may also require that the lender policy include coverage for a variety of endorsements.

The buyer generally pays for the premium for the lender policy.

48
Q

In the Lender’s policy, who pays for the premium?

A

The buyer generally pays for the premium for the lender policy.

49
Q

what is the Torrens System:

A

Colorado does not use this anymore.
The Torrens system is used in less than ten states and is not used in Colorado.

The Torrens system is a legal registration system used to verify ownership and encumbrances.

Registration in the Torrens system provides evidence of title without the need for an additional search of the public records.

Under the Torrens system, an owner of real property submits a written application to register his or her title.

If the applicant proves that he or she is the owner, the court enters an order to register the real estate.

50
Q

What is the Uniform Commercial Code

A

The Uniform Commercial Code (UCC) is a commercial law statute that has been adopted to some extent in all states.

The UCC provisions are concerned with personal property transactions not real estate.

The UCC governs the documents when personal property is used as security for a loan.

The UCC requires a borrower to sign a security agreement that must contain a complete description of the personal property items for which the lien applies.

A financing statement or a UCC-1 is filed and identifies any real estate involved when personal property is made part of the real estate

Once the financing statement is recorded, subsequent purchasers and lenders are put on notice of a security interest in the personal property.

51
Q

When a title company is doing an examination, they’re looking at a public record.

Is everything in the public record?

A

No. There are unrecorded documents. If there is unrecorded, the seller needs to tell.

52
Q

What is a cloud?

A

A defect

53
Q

What is the insured amount for the owner’s policy based on?

A

The amount of the policy is generally based on the contract price for the home.

54
Q

Lender’s policy

A

The coverage for the lender’s policy is determined by the amount of the mortgage loan.

Real Estate I (17 decks)

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