Real Estate Law Chapter 8

Raven own Blackacre. On October 10, she deeds the property to Alexis. Alexis records her deed on November 1st. Raven also deeds Blackacre to Bill on October 20th and he records his deed on November 5th. Assume that Bill is a bona fide purchaser. In a state that has a Race Statute whose deed will prevail?

Alexis' deed

All of the following are methods for sellers of real estate to prove they have good title, except:

Basic Form homeowners insurance

Pete purchases property from Marie, who purchased it from Doris, a minor, Pete obtains title insurance. Dori's shortly after reaching the age of majority, wants to reclaim her property. Which of the following best describes the result?

Doris is entitled to the property and Pete may recover from the insurance company

T or F A grantor-grantee index is much easier to use in tracing title than a tract index

FALSE

T or F An attract of title lists and summarizes legal instruments, such as deeds and mortgages, and renders an opinion as to their legal validity

FALSE

T or F Before recording statutes were enacted, the common law rule provided that the first purchaser to take possession had priority over other purchasers

FALSE

T or F In order to be protected by a lender's title policy, a home purchaser must pay for the coverage

FALSE

T or F In states that use the Torrens System, the Torrens certificate replaces the deed as evidence of title

FALSE

T or F Insurance practices usually provide for the full cost of repair or replacement up to policy limits in the event of loss, regardless of the size of the limits

FALSE

T or F Most homeowner policies provide for liability coverage, but only for damages resulting from accidents on the homeowner's property

FALSE

T or F Nearly all the states use a "Race-Notice Statute" since it combines both the attributes of fairness with efficiency

FALSE

T or F The Comprehensive Form homeowners insurance covers all possible risks, including floods and earthquakes

FALSE

T or F With property insurance, an insurable interest need only exist at the time the coverage is purchased

FALSE

T or F With property insurance, an insurable interest need only exist at the time to coverage is purchased

FALSE

Title registration systems, such as the one introduced into Russia after the fall of the Soviet Union, creates the following effects

Greater willingness by investors to undertake long term investments and greater willingness by lenders to take real estate as collateral for loans

Generally, before a deed is allowed under law to be recorded:

None of the above

On January 25th, 1904, Harris purchased certain property at a sheriff's sale and received a sheriff's deed, which was recorded at the time of the purchase. Paul alter claimed ownership of the property under a deed signed by the owner on December 8th, 1898, and recorded on December 21, 1903. Who has the superior title to the property in question under a notice recording statute? A race-notice statute? A pure race statute?

Paul wins under each of the 3 statutes because his deed was recorded before the sale to Harris. In Harris v. Paul, the court noted that "the deed under which the defendant Paul claims was placed of record on December 21, 1903...The plaintiff did not receive his sheriff's deed until about January 25, 1904. Under the circumstances, he took it with constructive notice of the existence of the Paul deed and therefore subject thereto".

Beta deeded his farm to Alpha, who did not record to deed. Alpha then deeded the farm to Sy, who immediately recorded his deed. Later Beta deeded his farm to Phi who immediately recorded her deed. Assuming that no one took possession, who owns the farm? Why?

Phi owns the farm. Under the recording statutes Phi would have no notice of Sy's recorded deed because there is nothing on record to link Sy's deed to Beta

Which of the following recording statutes is used the least among the states:

Race

T or F A person can acquire actual notice of a prior sale that is not recorded in the public record simply by hearing about it in a conversation

TRUE

T or F Although a vendor may assign his insurance coverage to a vendee, the assignment is not effective until the insurance company approves the assignment

TRUE

T or F In many states, a grantor must acknowledge a deed before a public official such as a notary public before the deed can be recorded

TRUE

T or F Under the modern mortgagee loss clause, a mortgagee-bank will be covered by an owner's insurance policy even when the mortgagor intentionally destroys the property by arson

TRUE

T or F X deeds his property to Y on June 1st and to Z on June 3rd. Z is aware of the earlier conveyance made to Y, but records first in public record. In a "Race Statute" state, Z's deed will prevail over Y's

TRUE

First Bank held mortgage on a house that was destroyed by a fire was covered under a homeowner's insurance policy that contained a modern mortgagee loss payable clause. However, the insurance company refused to pay the bank for the loss because the homeowner failed to give the company notice of the loss within 60 days, as required by the policy. May the bank recover from the insurance company? Why?

The bank may recover. Under the modern mortgagee loss clause the mortgagee's insurance is not invalidated by acts of the homeowner that would cancel coverage

JD purchased real estate in Russell County, Alabama from TW on August 19, 1992, to conduct an automobile salvage business. The deed was recorded on that date. Ethel had purchased the same land in October 1982 but did not record her deed until May 1993. Ethel did, however, have the property assessed for tax purposes and paid taxes for a number of years, unknown to JD. The state statute provided, in part: "The recording in the proper office of any conveyance of property...operates as a notice of the contents of such conveyance...all conveyances of real property, deeds, mortgages..are inoperative and void, as to purchasers for a valuable consideration... without notice, unless the same have been recorded before the accrual of the right of such purchasers" Who owns the property? Why?

The court in Lawton v. Stillwell ruled in favor of JD. The court stated that "the burden is on the holder of an unrecorded deed to show that a subsequent purchaser for value notice or constructive notice of his equity". Ethel argued that JD was not a bona fide purchaser for value because there were facts sufficient to put him on inquiry. The court disagreed with Ethel and stated that it knew of "no authority which holds that her assessment of the property for taxation can operate to impute to JD. Still well any notice of her claim to the property.

A fraternity built a float on the back of a truck at the fraternity house for use in a parade. During the parade, part of the float fell and injured a woman stationed on the float. Assuming that the members of the fraternity were negligent in constructing the float, is the insurer of the fraternity liable? Why?

The insurer is not liable. In Loker v Tulane University, the court rule that the injury resulted from the use of a motor vehicle, which was excluded from the fraternity's coverage

A person purchasing a home should, to protect his investment, purchase the following

Title insurance and homeowner's insurance

Peter bought the old Whiteacre mansion for $100,000. Due to the fact that it had an antique carved facade and other unique features inside the house, it would cost Peter $120,000 to replace the house if it were destroyed by fire. Peter, however, only insured it for $70,000. A fire from the stove destroyed the kitchen, which incurred an actual loss of $1,000. The cost of replacing the kitchen, however, is $4,000. If he had an 80% coinsurance clause in his homeowner's policy, Peter would:

receive less than the full $4,000 loss because Peter's insurance coverage was less than 80% of the full replacement cost of Whiteacre

Under a mortgagee loss clause, if a mortgagor owner intentionally destroys mortgaged property

the mortgage bank can recover from the insurance company, which can then recover its loss from the owner

The owner's title insurance policy developed by the American Land Title Association insures the owner against all of the following losses except:

when the property loses value due to zoning and building ordinances