Real Estate Exam 6 (law and practice)

The TILA RESPA Integrated Disclosure law requires the use of a: A. real estate attorney in every transaction B. licensed title company to close very transaction C. loan estimate and closing disclosure forms D. federally related form in every transaction

A, loan estimate and closing disclosure forms The Loan Estimate is a disclosure form given tothe borrower by the lender within 3 days of loan application. It outlines the terms of the loan and an estimate of closing costs. The Closing Discloure is provided to the Buyer and Seller a minimum of three business days prior to closing. It provides the final financial closing numbers for the loan between the buyer and lender and the agreement between the buyer and seller.

A House sold at $138,240 which was at a loss of 4%. What was the original cost of the house? A. 144000 B. 129200 C. 153710 D.143000

A. 144000 $138,240/ .96 (100% - 4% = 96%) = $144,000

A deed that contains no warranties, but in which the grantor does give up his own rights or claims, is known as: A. quitclaim deed B. word of conveyance C. a deed restriction D. the granting clause

A. a quitclaim deed A quitclaim deed is one in which NO guarantees are offered about past claims to the property, with the exception of those held by the grantor.

A summary of the history of all conveyances and legal proceedings affecting a specific parcel of real estate is called: A. affidavit of title B. certificate of title C. title insurance policy D. abstract of title

A. abstract of title An abstract is a historical accounting of contingencies, legal proceedings, and other events that affect a parcel.

A condensed history of title to a particular piece of real estate, including a summary of the original grant, and all subsequent conveyances and encumbrances affecting the property, is known as the: A. abstract of title B. evidence of title C. certificate of title

A. abstract of title An abstract of title is the condensed history of title to 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. The abstract of title furnishes the raw data for the preparation of a policy of title insurance for the parcel of land in question.

When the seller provides direct evidence of their title it is called: A. constructive notice B. notice of title C. deed notice D. actual notice

A. actual notice When the seller provides evidence direct either written or orally we call it "actual notice". When the buyer recieved notice through a title search of public records we call it "constructive notice"

The succession of conveyances whereby the present owner of record derives title is called the: A. chain of title B. certificate of title C. title insurance D. Torrens Certificate

A. chain of title The chain of title is the record of ownership from the first patent (instrument used to convey ownership from the government to the first private owner) to its current owner.

Proper recordation of documents affecting title and interest to real estate legally provides: A. constructive notice B. legal notice C. actual notice D. unilateral notice

A. constructive notice Constructive notice is recording documents in the public record.

When the grantor (the owner) offers the grantee (the buyer) a General Warranty Deed transfering ownership, the grantor warrants that the property is free from liens and encumbrances through which Covenent? A. covenant of seisin B. covenant of further assurance C. covenant against encumbrances D. covenant of quiet enjoyment

A. covenant against encumbrances This covenant is easy to remember, since the title is the same as what it protects against - encumbrances More about covenents and the General Warranty Deed A general warranty deed is one in which the grantor warrants or guarantees title against defects that existed before the grantor acquired title or that arose during the grantor's ownership. It does not warrant against encumbrances or defects arising from the grantee's own acts. The usual covenants or warranties contained in a general warranty deed are: 1. Covenant of seisin. Guarantees the grantor's ownership and that he or she has the right to convey it. The fact that the property is mortgaged or is subject to some restriction does not breach this covenant. 2. Covenant against encumbrances. Guarantees that there are no encumbrances or claims against the property except those specifically excluded in the deed. 3. Covenant of quiet enjoyment. Guarantees that the grantee will not be evicted or disturbed in possession of the property. Threats or claims by a third party do not breach this covenant. The grantee would have to actually be dispossessed before being entitled to seek recovery against the grantor under this covenant. 4. Covenant of further assurance. Guarantees that the grantor will procure and deliver any other instruments that are subsequently necessary to make the title good. 5. Covenant of warrant forever. Guarantees that the grantee shall have title to and possession of the property. Sometimes considered part of "quiet enjoyment."

Instruments affecting real estate are recorded with the County Clerk's office in the county where the property is located in order to: A. give constructive notice to the public via recorded documents about interest and rights in real estate B. give actual notice to the public via recorded documents about interest and rights in real estate C. to comply with the terms of the statute of frauds D. to prove the validity of the instrument

A. give constructive notice to the public via recorded documents about interest and rights in real estate A buyer of a property receives legal notification of the ownership status of a property in either or both of two ways - Actual Notice and Constructive Notice. Actual Notice means the owner directly gave to the buyer ownership documents regarding the interests and rights attached to the property. Constuctive Notice means the buyer has a legal obigation to research records in the public domain, typically but not exclusively, documents recorded with the County government in which the property is located. Failure to do so prevents the buyer from making a legal claim that they were not properly notifed of the rights and interests associated with the property.

A purchaser of real estate is generally entitled to receive from a seller the kind of title the courts describe as: A. marketable B. clouded C. saleable D. quiet

A. marketable Marketable title is such that there are no defects preventing transfer.

An abstract of title usually is accompanied by a(n): A. opinion B. copy of title insurance C. letter of assurance D. all of the above

A. opinion An attorney is generally asked to render an opinion regarding the conclusion of title after reviewing the abstract.

Under the Torrens System A. title passes when the registrar issues a new torrens certificate B.the torrens official performs exactly the same functions as the recorder of deeds C. the original deed is mailed to the sheriff after it has been registered D. the owner can cancel registration of a title at any time

A. title passes when the registrar issues a new Torrens certificate When the registrar in the county issues a new Torrens Certificate, title passes.

The process of search public records for proof of tile is called: A. title search B. title examination C. deed extraction D. public record review

A. title search A "Title Search" is a review of public records to determine and confirm a property's legal ownership, and find out what claims are on the property.

Essential elements for a deed include: A. recording B. words of conveyance C. signatures of grantor and grantee D.All of the above

B - Words of conveyance More info on Deeds: In Colorado real estate, there are several types of deeds, depending on the type/amount of protection given and received from the seller and buyer. From the Colorado Real Estate Manual: Types Of DeedsThere are four major classifications of deeds:(1) General warranty deed,(2) Special warranty deed,(3) Bargain and sale deed,(4) Quitclaim deed. The types of deeds differ solely in the degree of protection that the grantor (seller) promises or warrants to the grantee (buyer). No type of deed transfers any greater or lesser interest than another. For example, if a grantor conveys title in fee simple by a general warranty deed, the same fee simple ownership is conveyed as if he or she had used a quitclaim deed. However, the general warranty deed grantor promises to defend against any loss incurred due to any title defect, whereas transfer by quitclaim deed contains no such warrant. 1. General Warranty Deed.A deed in which the grantor warrants or guarantees title against defects that existed before the grantor acquired title or that arose during the grantor's ownership. It does not warrant against encumbrances or defects arising from the grantee's own acts. The usual covenants or warranties contained in a general warranty deed are: a. Covenant of seizin. Guarantees the grantor's ownership and that he or she has the right to convey it. The fact that the property is mortgaged or is subject to some restriction does not breach this covenant.b. Covenant against encumbrances. Guarantees that there are no encumbrances or claims against the property except those specifically excluded in the deed.c. Covenant of quiet enjoyment. Guarantees that the grantee will not be evicted or disturbed in possession of the property. Threats or claims by a third party do not breach this covenant. The grantee would have to actually be dispossessed before being entitled to seek recovery under this covenant against the grantor.d. Covenant of further assurance. Guarantees that the grantor will procure and deliver any other instruments that are subsequently necessary to make the title good.e. Covenant of warrant forever. Guarantees that the grantee shall have title and possession to the property. Sometimes considered part of "quiet enjoyment". The first two covenants relate to the past, and generally do not generally "run with the land" - meaning that only the current grantee may sue the grantor for a breach. The last three covenants protect against future defect and are said to run with the land - allowing any subsequent grantee to seek remedy for breach against any previous grantor. According to Colorado statute, "Covenants of seizin, peaceable possession, freedom from encumbrances, and warranty contained in any conveyance of real estate, or of any interest therein, shall run with the premises, and inure to the benefit of all subsequent purchasers and encumbrancers." (38-30-121 C.R.S.) 2. Special Warranty Deed.The grantor of a special warranty deed warrants the title only against defects arising after the grantor acquired the property and not against defects arising before that time. 3. Bargain and Sale Deed.Technically, any deed that recites a consideration and purports to convey the real estate is a bargain and sale deed. Thus, many quitclaim and warranty deeds are also deeds of bargain and sale. Bargain and sale deeds often contain a covenant against the grantor's acts, whereby the grantor warrants only that the grantor has done nothing to harm the title. This covenant would not run with the land. Examples of bargain and sale deeds with a covenant against the grantor's acts are an executor's deed, an administrator's deed, and a guardian's deed. 4. Quitclaim Deed.The grantor of a quitclaim deed warrants absolutely nothing. A quitclaim deed conveys the grantor's present interest in the land, if any. A quitclaim deed is frequently used to clear up a technical defect in the chain of title or to release lien claims against the property. Examples of such deeds are correction deeds, and deeds of release.

The monthly rent of $1,000 was paid to the Seller on April 1, The closing is April 20. What is the proration for rent? A. debit buyer 366.67, credit seller 366.67 B. credit buyer 333.33, debit seller 333.33 C. debit seller 1,000, credit buyer 1,000 D. credit buyer 1,000 , debit seller 1,000

B credit buyer 333.33 , debit seller 333.33 Step 1 - How many days in bill period? 30 days in AprilStep 2 - What is one day worth? $33.33333Step 3 - How many days to pay? Seller got paid for whole month. Buyer owns property for April 21 - 30 = 10 days (Remember -On National Exam seller has day of closing - "SON" Seller Owns National)Step 4 - One day rate x days to be paid - 10 x $33.33333 = $333.33, Debit Seller $333.33, Credit Buyer $333.33

A document that is given early in the closing process which binds the title company to provide title insurance at the closing is called: A. insurance promissory notice B. title commitment C. title insurance D. public records report

B title commitment As in the name, a "title commitment "is an offer to provide title insurance coverage for a property assuming the future owner accepts the exclusions and the seller satifies the existing conditions on the title

Where property is subject to deed restrictions prohibiting it from being sold to an African-American person; the sale of said property would be: A. void but restriction is enforceable B. valid, but the restriction is unenforceable C. the restriction would prevail and the property could not conveyed D. the restriction is unenforceable unless the deed indicates the race of the purchaser

B valid but the restriction is unenforceable The deed would be valid and title would be conveyed. The restriction in the deed relating to discrimination would be unenforceable. No restriction can violate Federal, State, or Local laws

In the purchase of real estate, the buyer is held responsible for facts and information obtainable through: A. media notice B. constructive notice C. restrictive notice D. construction notice

B. constructive notice A purchaser is responsible for facts and information obtainable through actual or constructive notice.

The TILA-RESPA Integrated Disclosure require the use of two disclosures, they are: A. seller's property disclosure and lead based paint disclosure B. loan estimate and closing disclosure C. title commitment and title insurance D. loan disclosure and constructive notice

B. loan estimate and closing disclosure The Loan Estimate provides quotes and estimates of a buyer's loan and closing costs. It must be given by the lender to the borrower within 3 days of applying for a loan. The Closing Disclosure (Sometimes called a "Settlement Sheet") discloses the final transaction costs for the closing and must be provided a minimum of 3 days prior to closing to the buyer and seller.

Recording a deed: A. guarantees ownership B. protects the interests of the purchaser C. eliminates prior liens D. perfects the instrument of it was improperly executed

B. protects the interests of the purchaser Recording a deed protects the interests of the buyer; it does not guarantee ownership or eliminate prior liens. Recording an invalid document does not perfect it.

Generally, if some defect is found with the title, the effect is that: A. the contract is immediately void B. the seller has a reasonable period of time to correct the defect C. the contract is revoked D. a new contract must be written

B. the seller has a reasonable period of time to correct the defect A seller is given a reasonable period of time (not specifically defined) to cure defects in a title, but is not found in breach of contract if defects cannot be cured.

Which of the following is accepted as proof of marketable title? A. trust deed B. Warranty deed C. Title insurance policy D. Affidavit

C - Title Insurance Policy Marketable title means that someone has clean ownership of a property and thus the right to sell it to another. A trust deed secures a promissory note and pledges real property as collateral for a loan. A warranty deed conveys ownership of property from the grantor to the grantee, a title insurance policy discloses liens, clouds, and defects on the title. An affidavit is nonspecific.

The best assurance of good title that a real estate purchaser can obtain is: A. valid quitclaim deed executed by the seller B. a general warranty deed C. title insurance D. a special warranty deed

C title insurance Even though a seller promises there are no liens or defects he is not telling the buyer about, there is no indemnification (reimbursement) for losses incurred unless there is a title insurance policy.

When Anthony purchased his home, the title insurance company's report included all of the following EXCEPT: A. a listing of outstanding loans against the property B. a report of existing tax liens against the property C. a record repairs made to the property D. a list of tax districts impacting the property

C. a record repairs made to the property Title insurance documents include all liens and defects of record and easements, but not the chain of title. ReferenceTitle Company reports such as a Title Commitment only reports items affecting the ownership status of the property, not physical characteristics.

Title insurance protects the buyer against: A. all liens B. all liens of record C. all liens of record that are not listed in the schedule of exception D. default by seller on their existing loan

C. all liens of record that are not listed in the schedule of exceptions Title insurance protects the buyer only against liens or defects of record that are not listed in the schedule of exceptions.

When a buyer receives evidence of the seller's title through a title search of public records it is called: A. actual notice B. title search notice C. constructive notice D. notice of title

C. constructive notice When evidence of title is found in a search of publicly available documents called "Public Records" we call it "Constructive Notice". When the seller provides evidence direct either written or orally we call it "actual notice".When Constructive Notice is given to the public by recorded documents. All people are considered to have knowledge of such documents and their contents, whether or not they have actually reviewed them.

Who receives the Debit and Credit for the Sales Price? A. debit seller, credit buyer B. debit buyer, credit buyer C. credit seller, debit buyer D. credit seller, debit seller

C. credit seller, debit buyer

Under the TILA RESPA Integrated Disclosure law the Closing Disclosure is to be given to the buyer and seller: A. one week prior to closing B. 24 hours prior to close C. three business days prior to close D. prior to the commencement of the closing

C. three business days prior to closing

A contract or document that protects (subject to specific exceptions) against loss due to defects of public record and against hidden risks such as forgeries is called: A. chain of title B. certification C. title of insurance D. abstract of title

C. title insurance The chain of title is the list of owners who have owned the property. Title insurance provides indemnification (reimbursement) for certain losses in connection with the ownership of property.

Marketable title means that the ownership and possession of property is readily transferable since it is free from valid claims by outside parties. Which of the following would NOT be acceptable as evidence of marketable title? A. torrens certificate B. Title insurance C. Abstract and opinion D. General warranty deed

D - General warranty deed A Torrens certificate is used in Eastern Colorado and is considered evidence of title. Title insurance indicates the condition of title. An abstract and attorney's opinion would be an indication of the condition of title. A general warranty deed conveys ownership, but does not name the current liens and defects upon the title and is NOT proof that the title is marketable.

Title Insurance does not cover: A. defects and liens listed in the policy B. defects known to the insured C. changes in zoning D. all of the above

D. all of the above

A standard title insurance policy indicates: A. if there are any judgment liens on the property B. if the property is free and clear of all encumbrances C. what the current condition of the title is, subject to stated exceptions D. all of these

D. all of these A standard title insurance policy includes a list of liens, judgments, and encumbrances in the schedule of exceptions, which is an indication of title condition.

When the grantor (the owner) offers the grantee (the buyer) a General Warranty Deed transfering ownership, the grantor warrants that the property is free from liens and encumbrances through which Covenent? A. covenant of seisin B. covenant of further assurance C. covenant of quiet enjoyment D. covenant against encumbrances

D. covenant of against encumbrances This covenant is easy to remember, since the title is the same as what it protects against - encumbrances More about covenents and the General Warranty Deed A general warranty deed is one in which the grantor warrants or guarantees title against defects that existed before the grantor acquired title or that arose during the grantor's ownership. It does not warrant against encumbrances or defects arising from the grantee's own acts. The usual covenants or warranties contained in a general warranty deed are: 1. Covenant of seisin. Guarantees the grantor's ownership and that he or she has the right to convey it. The fact that the property is mortgaged or is subject to some restriction does not breach this covenant. 2. Covenant against encumbrances. Guarantees that there are no encumbrances or claims against the property except those specifically excluded in the deed. 3. Covenant of quiet enjoyment. Guarantees that the grantee will not be evicted or disturbed in possession of the property. Threats or claims by a third party do not breach this covenant. The grantee would have to actually be dispossessed before being entitled to seek recovery against the grantor under this covenant. 4. Covenant of further assurance. Guarantees that the grantor will procure and deliver any other instruments that are subsequently necessary to make the title good. 5. Covenant of warrant forever. Guarantees that the grantee shall have title to and possession of the property. Sometimes considered part of "quiet enjoyment."

RESPA applies primarily to: A. construction loans B. refinancing of existing loans C. owner carry loans D. first loans for residential properties

D. first loans for residential properties The Real Estate Settlement Procedures Act applies primarily to new loans for the purpose of purchasing residential property. Truth in lending laws pertain to equity loans and seconds.

Which title insurance guarantees against every threat: A. standard policy B. extended policy C. mortgagee's policy D. none

D. none NO TITLE INSURANCE POLICY INSURES AGAINST EVERY THREAT

Deeds recorded with the county recorder: A. ensure ownership to the parcel of property B. proves actual notice of their existence C. informs the county or city planning department of ownership change D. provides constructive notice of ownership

D. provides constructive notice of ownership Recording a deed does not guarantee ownership as the document is not analyzed by the County Recorder. Recording places the deed into the public record which provides constructive public notice of it's existence. Someone who wants to learn the ownership of a property can find out by looking at the publicly available recorded deed. Recording is referred to as "constructive notice". "Actual notice" would occur if the owner directly provided the deed to an inquiring individual.More info about recording and deeds from EscrowHelp.com:Your deed is considered complete once it has been signed, sealed and delivered. Recording the deed is not required by law in order for the transfer from the seller to the buyer to take place. However, in order for you to be covered to protect yourself from future claims on the title, you should record the deed. This should be done simultaneously with the closing or as soon after the close of escrow as possible.Normally the escrow closing agent will see to it that the deed is recorded on the day of closing. You need not be inconvenienced with taking the deed to the court house for proper recording in the county official records. Recording the deed at closing protects you from any other party stepping forward and recording a document, such as a judgment, in it's place. The seller could technically record another deed if yours has not been recorded.To record a deed yourself you need only to take the deed to the appropriate recording office in your area. The recorder will then index and transcribe the deed in the public records and it will be available for anyone to see. "Constructive notice" is said to be given once the deed is recorded.The deed becomes part of the property's chain of title. If anyone were to look up your property, your name would show up as the official owner. You want to be sure that your name and address is correct on the deed, as your real estate tax bills will be sent to the name and address listed at the recorder's office. If the address or your name was incorrectly listed, you could possibly never receive the property tax bills or any notices.Only written documents affecting an interest in property may be recorded and the appropriate fee must be paid to the county recorder's office in the county in which the property is located. The document must be acknowledged by an authorized person, such as a judge or notary public. The acknowledgment will verify the identity of the person signing the document, but will not make any statement or guarantee as to the validity of the document itself.

The part of a title insurance policy that sets forth all encumbrances and defects that are not insured, is called the: A. schedule of defects B. citation clause C.non-exclusionary clause D. schedule of exceptions

D. schedule of exceptions The schedule of exceptions is included in every title insurance policy. It lists all of the liens and defects that are currently of record and are not insured against.

Recording a deed at time of closing: A. is all that is required to pass title to real estate B.gives constructive notice of ownership of real property C. ensures ownership of real property D. warrants the title of real property

D. warrants the title of real property Recording a deed does not pass title - execution of the deed conveys ownership. Recording gives constructive notice to the world that the document exists, of the new legal owner, and of the rights and interests which were passed to the new owner.