National Exam- Forms of Ownership, Transfer, and Recording of Title

general warranty deed

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.

special warranty deed

A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her 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."

quitclaim deed

A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest. Used to clear a cloud on a title

Joint Tenancy

A form of co-ownership that includes the right of survivorship.

life estate

A freehold estate in land that is limited in duration to the life of the owner or to the life or lives of some other designated person or persons.

chain of title

A history of the ownership affecting title to a parcel of land.

abstract of title

A history of the ownership of a parcel of land which lists transfers of title, rights, and liabilities.

triple net lease

A lease in which the tenant or lessee is responsible for paying a portion of or all of the common expenses related to real estate ownership, in addition to base rent.

quiet title suit

Also called an action to quiet title - a court procedure to correct or cure a defect or cloud on the title

Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease and the other an absolute net lease. Why is his attorney arguing against the latter?

An absolute net lease has no legal defenses if Simon fails to pay.

riparian rights

An owner's rights in land that borders on or includes a stream, river, or lake. These rights include access to and use of the water.

A trust involves a special relationship called a fiduciary relationship. Which of the following statements is true regarding trusts?

Any asset can be held in a trust

Will was sued for damages related to a car accident in which he was involved last year. As part of the proceedings, the court placed a lien against his primary residence. What type of lien is this?

Attachment An attachment lien is when the courts place on encumbrance on the property of a defendant in a lawsuit for monetary damages.

Tenancy in Common

Co-ownership of property in which each party owns an undivided interest that passes to his or her heirs at death.

Which of the following is a life estate in property held by a widow?

Dower

Penny landed a great job in a new city, but now she needs to find a place to live. Rather than commit to a long-term lease, she wants a short-term rental while she explores the various neighborhoods. She's hoping to sign a lease which can be terminated at any time, also known as a(n) ______.

Estate at will An estate at will is a leasehold estate with an unknown duration. An estate for years still has a fixed termination date, and a periodic estate is automatically renewed at the end of the lease.

Select the statement that accurately describes an abstract of title.

Few states require an abstract of title when conveying property.

After purchasing a property, what can Jeremiah do to clear a possible future claim on the property's title?

File suit to a quiet title

Stu is buying Freddie's property. What must occur for the transfer of title to take place?

Freddie must intend to convey the property to Stu.

Simon recently passed away. He owned title to his property in severalty, as a fee simple absolute estate. What will happen to his property?

His heirs, as described in his will or the state law of descent, will get the property.

Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned?

It's owned as an estate in severalty Corporations are legal entities and hold property similar to the way a sole proprietor or an individual does: in severalty.

Marsha's title insurance policy was issued on closing day, June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions?

Marsha's second mortgage on the property, which was properly recorded in January.

alluvion

New deposits of land as a result of accretion

When you close on a condo, a title search, deed transfer, and recordation are ______.

Part of the process

trustor

Person who creates a trust

Hal and Sara own a 212-acre farm. Their property is landlocked, but they have permitted water rights to use the stream located six miles away for irrigation purposes. What kind of water rights do they hold?

Prior appropriation The doctrine of prior appropriation grants water rights based on need, not adjacency. Hal and Sara likely live in the western part of the U.S. where many states subscribe to this doctrine.

Which statement most accurately describes the type of notice provided by recording a change of ownership document?

Recording the deed provides constructive notice of the property sale.

Lewis and Elliot started a real estate investment business together. After much discussion with their attorney, they decided to incorporate, but in such a way that they are treated like a partnership and don't have to pay corporate taxes. What form of business do they have?

Sub chapter S corporation S corporations are corporations that are taxed as partnerships. They don't pay corporate income taxes, and shareholders may deduct losses on their taxes that represent their share of the corporation's losses.

Once Greg and Caitlin were married, they decided to purchase a home together. Since it was a shotgun wedding after a weekend in Vegas, they made sure that their ownership included the right of survivorship as well as protection from the other spouse attempting to sell the house from under them. Though not recognized in all states, the most likely form of co-ownership under which they would make this purchase is ______.

Tenancy by the entirety Tenancy by the entirety is concurrent ownership between two married people as an integrated legal unit. This includes the right of survivorship as well as a requirement that conveyance can only happen when both parties consent to it.

estate at sufferance

Tenant remains on the property, without the landlord's permission, after the lease has expired

Rhonda hasn't paid her HOA dues in two years. Her attorney recently informed her that her state grants HOA-related liens a super lien status. What does this mean?

The HOA will be paid before any other liens, even a property tax lien. Super lien status means that the lien is granted higher priority than all other liens, including mortgages, deeds of trust, or property taxes.

Reuben purchased a property from a seller who gave him a general warranty deed. What's true of Reuben's deed to this property?

The deed provides the greatest protection available from a grantor to a grantee.

escheat

The state takes property upon an owners death if there is no will & no heirs exist.

What special concern do foreclosed properties often present?

There could be hidden title issues

Limited liability companies and limited liability partnerships are favorable forms of business because ______.

They don't require a general partner.

What type of insurance protects a lender's collateral interest in a property that's being financed?

Title insurance

What's the relationship between the title search, title insurance policy, and document recording?

Title representatives and attorneys who perform title searches look for documents that are publicly recorded. During a title search, title company representatives look specifically for items that are publicly recorded, and the schedule of exceptions will exclude items that aren't recorded.

A quitclaim deed does which of these?

Transfers without warranty any interest or title the grantor has when conveying it

encumbrance

a defect on a property's title that can be monetary, such as a lien, or physical, such as an easement that limits the owner's use of the property.

living trusts

created during the property owners lifetime

involuntary lien

created without property owners permission

reliction

creation of dry land by the gradual withdrawal of water

Which type of deed conveys real property from a decedent's estate to a buyer?

executors deed

erosion

gradual loss of land due to natural force

freehold state

interest in real property where the owner's possession of the property is of indeterminate duration

quiet title action

involves locating a person who may have some claim on the title and determining the validity of any claims on title

period estate

lease that is automatically renewed at the end of its term (month to month lease)

estate at will

lease without an established ending that can be terminated by either party

fee simple absolute

most complete form of ownership and includes the entire bundle of rights in real property

Estate in Severalty

one person owns the property and all other interests are severed

beneficiary

one who receives benefits

trustee

person who manages the trust and ensures the terms of the trust are carried out

bundle of rights

possession, control, exclusion, enjoyment, and disposition (right to sell or convey the property)

accretion

process by which water carries rock, sand, and soil and causes build up

fee simple defeasible

property holder owns the property with all legal rights, but subject to a condition and if the condition is breached, the property may go back to original owner

littoral rights

rights of a landowner adjacent to a lake Remember "L" - Littoral/Lake

leasehold estate

specified end date

eminent domain

the right of government to take private property for public use

avulsion

the sudden loss of land by action of water

mortgage lien

voluntary because it is created with owners permission

when does title transfer occur?

when the grantor delivers the deed and the grantee accepts