Spruce Real Estate Chapter 7
If it can be proven that someone had actual notice the the lack of constructive notice doesn't mater
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A cloud on title is a pain the chain, it can be fixed with a suit to quiet title
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Deeds do NOT show evidence of marketable title
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Title Insurance does NOT include a chain of title in its content. The chain of title is prepared separately by a lawyer.
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Written documents affecting land MUST be recorded in the county where the land is located
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title passes when the grantee's application for registration has been approved and the real estate has been registered.
**in Torrens system
How to get Marketable Title? Evidence title is marketable, prove it
1. Abstract of Title with an attorney's opinion 2. Title Insurance 3. Torrens System
Notice (3 types)
1. Constructive Notice 2. Actual Notice 3. Inquiry Notice
Abstract of Title
A brief, chronological summary of the recorded documents affecting title to a particular parcel of real property. Needs an opinion letter from a lawyer to accompany it to be marketable title. chronological list of everything including liens, encumbrances, and current status; a summary giving details of the title deeds and documents that prove an owner's right to dispose of land, together with any encumbrances that relate to the property; part 1 of two parts(attorney's opinion letter) to give marketable title
Lien
A financial claim against property; financial encumbrance
Suit to quiet title
A legal action in which a court is asked to determine who actually owns a parcel of land and what claims or liens against the property are valid. Sometimes done to remove clouds on a title. quit the claim on the property, same thing as action to quiet title
Abstractor
A professional in the title industry (sometimes an attorney) who conducts a title search and produces an abstract. Starts with original grant (root, owner);
When Ursula purchased her home, the title insurance policy she received did NOT include which of following ? A) A legal description of the insured real estate B) A record of all of the previous owners of the property C) A list of defects not covered D) The kind of estate or interest being insured
A record of all the previous of previous owners, this would be called a chain of title and would be prepared by lawyer
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. NOT a guarantee of ownership; A title examiner's written opinion of the current condition of a property title based on a search of the public records dating back for a specified number of years. Equate to attorney's opinion;
Torrens System
A system of title registration which lists all ownerships and encumbrances in a court. Title search is made easier since no claim is effective until recorded in this system. A legal registration system used to verify ownership and encumbrances. Simply registering in the Torrens System provides evidence of title without the additional need of search thru public records; NOT used in WV, used in less than 10 states; application and registered key terms
Under the Torrens system A) title passes when the grantee's application for registration has been approved and the real estate has been registered. B) the Torrens official performs exactly the same functions as the recorder of deeds. C) the original deed is mailed to the buyer after it has been registered. D) the registration of a title can be canceled by the owner at any time.
A, title passes
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. Same as certificate of title; part 2 with abstract of title part 1 = marketable title
A cloud on the title
Any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title. A break in the chain
Which of the following is true about title insurance? it insures against future losses it protects the insured from events before the policy was issued it covers changes in land uses brought about by zoning ordinances it includes defects know to the buyer
B, events before, ensures the past
A document that protects against hidden risks such as forgeries and loss due to defects in the title, subject to specific exceptions, is called a(n) A) chain of title. B) abstract of title. C) certificate of title. D) title insurance policy.
Certificate of title
A suit to quiet title refers to A) a title insurance company's search of the title. B) a mortgagor relinquishing title after foreclosure. C) the deposit of a title with an escrow agent. D) the removal of a cloud on the title by court action.
D, removal; it simply quiets any claim on the title usually by use of a quit claim deed
Abstract of title with a certificate of title is a ______ title?
Marketable Title ( abstract of title is our book report/cliff notes, certificate of title is attorney's opinion letter = Marketable Title, shows property can be sold, what we want)
Is marketable title the same as LEGAL title?
No
Constructive Notice
Notice given to the world by recorded documents. All people 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. File at courthouse; most of time lawyer files after closing; created a more valid case of ownership based on priority
Inquiry Notice
Notice of facts that create a duty to inquire further whether unrecorded interests exist; investigate why something isn't in public record
Lender policy
Protects lender; buyer pays based on loan amount (mortgagee policy)
Recording
The act of placing documents in the public record.
Marketable Title means
The buyer could sell later on or mortgage the property. You can have a legal title and not a marketable title. It proves proof of ownership; a title that a court of equity considers to be so free from defect that it will legally force its acceptance by a buyer
Chain of Title
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title. The record of a property's ownership; grantor (seller) gives to grantee (buyer)
Title insurance does not include a chain of title in it's content. True False
True
The Torrens System uses an application that is submitted to the county clerk for approval. True False
True, widely used in Canada
The body of law that governs personal property transactions (but does not apply to real estate) and involves use of security agreements, financing statements, and bulk transfers is the American Land Title Assoc Uniform Commercial Code Parol Evidence Rule Statute of Limitations
Uniform Commercial Code
What is a problem in the historical chain of title called? an action to quiet the title a cloud on the title a cloud over your luck
a cloud on the title
Uniform Commercial Code (UCC)
a comprehensive statutory scheme that includes laws that cover aspects of commercial transactions; concerned with personal property transactions; it does not necessarily pertain to real estate; filing a financing statement (or UCC-1) allows you to use personal property as collateral for a loan coupled with a real estate venture; pack real and personal property together to get the loan
All of the following would be acceptable as evidence of marketable title EXCEPT a Torrens certificate a title insurance policy an abstract and legal opinion a property owners warranty deed
a property owners warranty deed
which of the following would be used to clear a defect from the title records a lis pendens an estoppel certificate a suit to quiet title a writ of attachment
a suit to quiet title (probably done with a quit claim deed)
No subsequent grantee received legal title
a suit to quiet title fixes it
Title Insurance
a type of insurance that protects the buyer if problems with the title are found later; does prove marketable title; insures the past; most common proof of ownership, most common proof of marketable title
A written summary of all conveyances and legal proceedings affecting a specific parcel of real estate is called affidavit of title certificate of title abstract of title title insurance policy
abstract of title
What is evidence of marketable title? abstract of title abstract of title with an attorneys opinion abstract of title with a broker's opinion letter
abstract of title with attorney's opinion
Place a check mark by ALL the ways MARKETABLE title can be shown (check all that apply) Torrens Certificate Abstract of Title Abstract of title with a certificate of title abstract of title with an attorney's opinion title insurance
all but abstract of title
If there was a problem (a cloud on the title) it would be removed by removing title an action to bring suit an action to quiet title
an action to quiet title
Actual Notice
an assertion of real property interests that is open, continuous, and apparent to all who examine the property; It's my house!
title search
an examination of documents, public records to determine whether any defects exist in the chain of title; exam documents recording title to the property to ensure the owner has a clear title; goes back 60 years; gives good idea but not 100%
Can the seller actually convey good title?
are there liens? encumbrances?
All of the following would be considered evidence of marketable title EXCEPT an abstract of title with a legal opinion a title commitment or title insurance policy a certificate of title by a real estate broker a certificate of title by a real estate attorney
broker
An abstract of title does NOT provide evidence of title unless it is accompanied by a(n) A) copy of the title insurance policy. B) letter of insurance coverage. C) letter of warranty. D) attorney's opinion of title.
certificate of title
The history of all owners of a specific parcel of real estate is the property's A) chain of title. B) certificate of title. C) title insurance policy. D) abstract of title.
chain of title
The abstract of title contains only the chain of title a chronological list of everything including, liens, encumbrances, and current status
chronological list
All of the following are forms of notice or interests in real property EXCEPT constructive notice inquiry notice actual notice delinquency notice
delinquency
Documents affecting real estate are recorded or filed in the county in which the property is located to A) enable interested parties to know where to look to discover the various interests of other parties to the transaction. B) give actual notice of the grantee's interest in the property. C) comply with the terms of the statute of frauds that all transfers for more than one year be in writing and signed. D) prove the validity of the execution of the document.
enable interested parties to know where to look to discover the various interests of other parties to the transaction
Title Insurance *
evidence of marketable title, insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans
The part of the title insurance policy that sets forth all of the encumbrances and defects that will NOT be insured against is called the schedule of defects citation clause nonexclusionary clause exclusions
exclusions
Security Agreement
goes hand in hand with the UCC-1 showing security interest in chattels (personal property)
Unrecorded Documents
include current real estate taxes and special assessments that are not overdue; inheritance taxes and franchise taxes. Notice of these must be gained from sources other than the Recorder's office, such as evidence of the payment of real estate taxes, special assessments, Municipal Utilities, and other taxes that can be gathered from paid tax receipts and letters from municipalities. Lawyers will discover these
The Marketable Title Act
limits the time period these records need to be searched; 60 years in WV
The mortgagee received a title insurance policy on the property on the buyer is pledging as security for the mortgage loan. Which of the following is true? the policy is issued for the benefit of the buyer the policy guarantees that the buyer's equity will be protected the amount of coverage is commensurate with loan amount the amount of coverage increases as the borrower's equity increases
mortgagee is the lender, the bank, the amount of coverage is commensurate with the loan amount; bankers perspective. They want to only loan the amount of money that the property is insured for
priority
order of rights based on time; the longer recorded & uncontested, the least likely it is to be taken
The type of title insurance that will protect the owner and heirs is called a(n) A) lender's policy. B) owner's policy. C) leasehold policy. D) certificate of sale policy.
owner's policy
Financing notice
piece of paper. UCC-1, combine real property and personal property to get financing for loan
Owner's Policy
policy of title insurance that insures an owner's title to real property
Marketable Title
proof of ownership; One which is free from reasonable doubts or objections, and which the courts would compel a purchaser to accept under the terms of a sales contract. Questions MUST be raised BEFORE acceptance of the deed; discloses no serious defects and does not depend on doubtful questions of law or fact to prove it's validity, nothing serious that would hurt resale; not expose a purchaser to the hazard of litigation or threatens the quiet enjoyment of the property; convince a purchaser, acting on business principals and knowledge of fact and legal significance that they can sell or mortgage the property at a later time
The recordation of a warranty deed A) gives actual notice of the grantee's rights. B) gives constructive notice of an individual's interest. C) prevents claims of parties in possession. D) provides defense against adverse possession.
protects the grantee
Subrogation
right given to insurance company to go get anyone causing harm
f there is a problem that the title insurance company needs to go after the person who did the harm it is called subordination subrogation
subrogation
A buyer took delivery of the deed to his new house but neither recorded the deed nor took possession of the property. Under these circumstances: the transfer of the property from the seller is ineffective the buyer's interest is not fully protected against third parties the deed is invalid after 90 days the deeds is invalid after 6 months
the buyer's interest is not fully protected against third party
an action to quiet title
the judge/ court makes a decision to fix the cloud (problem) in the troubled title (maybe a past title was forged)
A certificate of title can be replaced if:
the owner applies for a duplicate title and pays the fee
All of the following are true regarding public records EXCEPT: they give notice of encumbrances they establish priority of liens they guarantee marketable title they provide constructive notice about interests in the property
they guarantee marketable title
The BEST reason for a buyer to obtain title insurance is A) that the mortgage lender requires it. B) to ensure that the seller can deliver marketable title. C) to ensure that the abstractor has prepared a complete summary of title. D) to pay future liens that may be filed.
to ensure that the seller can deliver marketable title
Exclusions to what Title Insurance can cover
zoning ordinances, restrictive covenants, easements, water rights, current taxes and special assessments
