Unit 7: Title Records

Action To Quiet Title

A court action that establishes ownership when ownership cannot be traced through an unbroken chain of title

Torrens System

A method of evidencing title by registration with the proper public authority, generally called the registrar ; named for its founder, Sir Robert Torrens

Title Insurance

A policy insuring a property owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects, and matters specifically excluded by the policy.

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.

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.

Actual Notice

Express information or fact; that which is known; direct knowledge

Marketable Title

Good or clear title, reasonably free from the risk of litigation over possible defects.

Constructive Notice

Notice given to the world by recorded documents. All persons 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.

Recording

The act of entering or recording documents affecting or conveying interests in real estate in the recorder's office established in each county. Until it is recorded, a deed or a mortgage ordinarily is not effective against subsequent purchasers or mortgagees.

All of the following would be considered evidence of marketable title EXCEPT

The answer is a certificate of title by a real estate broker. A certificate of title may be prepared by a title company, licensed abstractor, or attorney, but not a real estate broker.

A title insurance policy that protects the interests of a mortgagee is called

The answer is a lender's policy. The mortgagee is the lender. The mortgagee's policy is transferable.

A title that has no defects that could carry over as a problem for the next property owners is called

The answer is a marketable title. Most contracts state that the seller is responsible for providing marketable title to the property. The term marketable means a title that has no defects that could carry over as a problem for the new owner at whatever time the new owner decides to sell.

A seller delivered title to a buyer at closing. A title search had disclosed no serious defects, and the title did not appear to be based on doubtful questions of law or fact or to expose the buyer to possible litigation. The seller's title did not appear to present a threat to the buyer's quiet enjoyment, and the title insurance policy provided was sufficient to convince a reasonably well-informed person that the property could be resold. The title conveyed would commonly be referred to as

The answer is a marketable title. Title that is good enough that a reasonably well-informed person would accept it is called marketable title.

A lender making a loan secured by a mortgage will probably require the borrower to purchase

The answer is a mortgagee's title insurance policy. To protect their interests, lenders generally require a borrower to purchase a mortgagee's title insurance policy (also called a lender's policy or a loan policy).

Public records are crucial in establishing all of the following EXCEPT

The answer is adverse possession. Public records contain detailed information about each parcel of real estate, so they are crucial in establishing the priority of liens, establishing ownership, and giving notice of encumbrances.

Title insurance will cover title defects found

The answer is after closing. Title insurance covers only those defects listed in the policy and found after closing. If defects are found before closing (called exceptions), the seller must clear them and the title or the buyer must accept the property title with the defect.

A written summary of the history of all conveyances and legal proceedings affecting a specific parcel of real estate is called

The answer is an abstract of title. An abstract of title summarizes the various events and proceedings that affected the title throughout its history.

The document that is a historical summary of all the documents of title is

The answer is an abstract of title. The abstract summarizes all the documents that create the chain of title; an attorney then reviews the abstract and renders a title opinion.

A buyer who wants to know whether the title for a property is in good standing would order

The answer is an abstract. An abstract, or title policy, will tell the state of the title and whether any title defects have been found.

A title search in the public records may be conducted by

The answer is anyone. Real estate records are public records, open to all members of the public.

In some areas of the country, acceptable proof of title is an abstract and

The answer is attorney's opinion of title. The abstract accompanied by an attorney's opinion is sufficient in some areas to establish marketable title.

A property buyer should object to any defects in the title to the property

The answer is before acceptA seller delivered title to a buyer at closing. A title search had disclosed no serious defects, and the title did not appear to be based on doubtful questions of law or fact or to expose the buyer to possible litigation. The seller's title did not appear to present a threat to the buyer's quiet enjoyment, and the title insurance policy provided was sufficient to convince a reasonably well-informed person that the property could be resold. The title conveyed would commonly be referred to asance of the deed. Once a buyer has accepted a deed with unmarketable title, the only available legal recourse may be to sue the seller under any covenants of warranty contained in the deed.

A property buyer should object to any defects in the title to the property

The answer is before acceptance of the deed. Once a buyer has accepted a deed with unmarketable title, the only available legal recourse may be to sue the seller under any covenants of warranty contained in the deed.

Standard coverage in an owner's title insurance policy would cover all of the following EXCEPT

The answer is changes in land use brought about by zoning ordinances. Standard coverage in an owner's title insurance policy would cover defects found in public records, forged documents, incompetent grantors, incorrect marital statements, and improperly delivered deeds. It would not include changes in land use brought about by zoning ordinances.

The legal presumption that information may be obtained by an individual through due diligence is

The answer is constructive notice. Because the information or evidence is readily available to the world, a prospective purchaser or lender is responsible for discovering the interest.

Properly recording documents in the public record provides what type of notice to the world of an individual's rights or interest?

The answer is constructive. Constructive notice is the legal presumption that information may be obtained by an individual through due diligence. Properly recording documents in the public record serves as constructive notice to the world of an individual's rights or interest, as does the physical possession of a property. Because the information or evidence is readily available to the world, a prospective purchaser or lender is responsible for discovering the interest.

All of the following maintain public records EXCEPT

The answer is court secretaries. Public records are maintained by recorders of deeds, county clerks, county treasurers, city clerks, and collectors. Court secretaries do not maintain public records.

Which of the following is NOT proof of ownership?

The answer is deed. A warranty deed contains no proof of the condition of the grantor's title at the time of the conveyance.

Which of the following is NOT covered by an extended title insurance policy?

The answer is defects and liens listed in the policy. A title company will not cover against defects that appear in a title search. These are included in the policy as exclusions.

To be eligible for recording, and thus made part of the public record, a document should be

The answer is drawn and executed according to state law. States may have specific rules about the size of documents and the color and quality of paper they are printed on. Electronic recording also may be permitted.

Defects and liens listed in the title policy are included in the policy as

The answer is exclusions. A title company will not cover against defects that appear in a title search. These are included in the policy as exclusions.

The commitment to issue a title policy includes all of the following EXCEPT

The answer is full sale price of the property. The commitment to issue a title policy includes the name of the insured party, legal description of the real estate, estate or interest covered, conditions and stipulations under which the policy is issued, and a schedule of all exceptions, including encumbrances and defects found in the public records and any known unrecorded defects. It does not include the full sale price of the property.

Which of the following are traditionally covered by a standard title insurance policy?

The answer is improperly delivered deeds. The rights of persons in possession (prior to purchase) are not covered by the basic title insurance policy, but they are covered by extended coverage policies. Changes in land use related to zoning are not covered in any type of title insurance. Standard coverage will protect against improperly delivered deeds.

Which of the following BEST describes chain of title?

The answer is it is a history of all documents and legal proceedings affecting a specific parcel of land. Chain of title is the entire history, or record, of recorded transactions affecting a property, while an abstract is a summary of relevant facts found when examining the history. Title insurance is used to protect against defects in the record of a property's ownership and is issued only after a title examination, which evaluates the public records of the property.

Mortgagee title policies protect which parties against loss?

The answer is lenders. A mortgagee title policy protects the mortgagee—the lender. An owner's policy protects the owner, heirs, and devisees.

In the states in which it has been adopted, the Marketable Title Act

The answer is limits the time beyond which title records must be searched. The law extinguishes certain interests and cures certain defects arising before the root of the title.

All written documents that affect title to real estate should be

The answer is made a part of the public record. The public record for the jurisdiction in which the real estate is located serves notice to the world of the existence of the documents of transfer, liens, and other instruments that affect title to real estate.

MOST contracts state that the seller is responsible for providing what type of title to the property?

The answer is marketable. Most contracts clearly state that the seller is responsible for providing marketable title to the property. The term marketable means a title that has no defects that could carry over as a problem for the new owner at the time that owner decides to sell the property.

A standard title search would reveal all of the following EXCEPT

The answer is parties in possession. Title searches use public records to find all items that have been recorded. Items that are typically recorded are tax liens, deed restrictions, easements, and mortgages. The parties in possession of the property would be found through a physical inspection of the property.

Documents referred to as title evidence include

The answer is policies of title insurance. Deeds are never considered title evidence. Policies of title insurance provide the best title evidence.

The date and time a document was recorded help establish which of the following?

The answer is priority. Time of recordation is an important consideration in establishing the priority of claims in the event of a sale.

Actual notice is

The answer is provided when someone has been given information. An individual who has searched the public records and inspected the property has actual notice.

A cloud on the title to a parcel of real estate is

The answer is resolved by an action to quiet title. Legal action might be required if there is a gap in the chain of title, as may happen if a grantor acquired title under one name and conveyed it under another name. Evidence can be presented in court to show that the grantee under the earlier deed was the same person who was the grantor in a later deed.

A history of all recorded liens and encumbrances is revealed in

The answer is the abstract. The title insurance policy lists coverage and exceptions to the policy. Unrecorded documents have not been examined. The chain of title traces ownership. The abstract is the most complete documentation of recorded liens and encumbrances.

A mortgagee received a title insurance policy on the property a buyer is pledging as security for the mortgage loan. Which of the following is TRUE?

The answer is the amount of coverage is commensurate with the loan amount. A lender's policy is used for the benefit of the mortgagee. The amount of coverage depends on the amount of the mortgage loan and is decreased as the loan balance is reduced.

A buyer took delivery of the deed to a new house but neither recorded the deed nor took possession of the property. Under these circumstances,

The answer is the buyer's interest is not fully protected against third parties. Constructive notice to the public of interest in a parcel of real estate is served when the deed is recorded and physical possession of the property is taken. Without this, an owner's interests could be jeopardized.

A buyer bought a house, received a deed, and moved into the residence but neglected to record the document. One week later, the seller died and the heirs in another city, unaware that the property had been sold, conveyed title to a relative, who recorded the deed. Who owns the property?

The answer is the buyer. Constructive notice can be given in either or both of two ways: taking possession and/or recording one's deed. The buyer took possession. The relative who purchased the property from the seller's heirs was responsible for both checking the public records (which still showed the seller as owner because the buyer had not yet recorded the purchase) and visiting the property to inquire into the rights of any parties in possession. The relative-purchaser's investigation would have revealed that the seller's heirs did not have the right to sell the property in question.

The encumbrances and defects that will NOT be insured against under a title insurance policy are included in

The answer is the list of exclusions. Title insurance does not offer guaranteed protection against all defects. The policy names uninsurable losses called exclusions.

Chain of title is MOST accurately defined as

The answer is the record of a property's ownership. Chain of title is the entire history, or record, of transactions affecting a property, while an abstract is a summary of relevant facts found when examining the history. Title insurance is used to protect against defects in the record of a property's ownership and is issued only after a title examination, which evaluates the public records of the property.

Who is usually responsible for providing marketable title to the property?

The answer is the seller. Most contracts clearly state that the seller is responsible for providing marketable title to the property.

Which of the following is acceptable evidence of marketable title?

The answer is title insurance policy. Proof of ownership is evidence the title is marketable, and title insurance is used to prove ownership.

Evidence of marketable title includes which of the following?

The answer is title insurance policy. Proof of ownership is evidence the title is marketable, and title insurance provides the best defense of title.

How many title policies are typically issued at a closing?

The answer is two. The owner's policy is for the benefit of the owner (buyer), and the lender's policy is for the benefit of the mortgage company.

Extended coverage in an owner's title insurance policy would cover which of the following?

The answer is unrecorded liens not known by the policyholder. Extended coverage in an owner's title insurance policy would include standard coverage plus defects discoverable through a property inspection, including unrecorded rights of persons in possession, an examination of the survey, and unrecorded liens not known by the policyholder.

Which of the following is NOT covered by a standard title insurance policy?

The answer is unrecorded rights of parties in possession. All are covered except unrecorded rights of parties in possession. These are covered by an extended coverage policy.

Abstract Of Title

The condensed history of the recorded ownership of 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.

Title Search

The examination of public records relating to real estate to determine the current state of the ownership.

Priority

The order of position or time. The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens.

Subrogation

The right acquired by the title company to any remedy or damages available to the insured when a title company makes a payment to settle a claim covered by a policy.

Chain Of Title

The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title