Unit 9

Certificate of Title

A statement of opinion of the title's status as of the date it is issued. It is not a guarantee of ownership. It certifies the condition of the title based on the title search. May be prepared by a title company or an attorney. Certificate of title is not perfect. Unrecorded liens or rights of parties in possession cannot be discovered by a search of public records.

Preliminary report of title

After examining public records, the title insurance company usually issues what may be called a preliminary report of title or a commitment to issue a title policy. It includes the name of the insured party, the legal description of the real estate, the estate or interest covered, the 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

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 ownership

Uniform Commercial Code (UCC)

Commercial law statute adopted to some extent in ll 50 states. Applied to personal property transactions- not real estate.

Suit to quiet title

Court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.

Title insurance not covered

Defects and liens listed in policy Defects known to buyer Changes in land use brought about by zoning ordinances

Title insurance standard coverage

Defects found in public records Forged documents Incompetent grantors Incorrect marital statement Improperly delivered deeds

Form of proof of ownership

Evidence of the kind of a state and all liens against a parcel of real estate can usually be proven by one of the forms of proof of ownership. In PA a certificate of title or title insurance is used as proof of ownership

Title search

Examination of all public records to determine whether any defects exist in the chain of title

Financing Statement UCC-1

Filed with recorder of deeds; identifies real estate involved when personal property is made part of the real estate. Many lenders require security agreement and financing statement be filed when real estate pledged as collateral includes chattels or readily removable fixtures.

Constructive Notice

Legal presumption that information is available and can be obtained by an individual through diligent inquiry. Properly recorded documents in the public record serve as constructive notice to the world of an individual's rights or interest as does taking physical possession of a property. Because the information or evidence is readily available a prospective purchaser or mortgage lender is responsible for discovering the interest.

Actual notice

Means that not only is the information available but also that someone has been given the information and actually knows it. An individual who searches the public records and inspected the property has actual notice. Also known as direct knowledge.

Title Insurance

Protects the insured from an event that occurred before the policy was issued rather than against future events. Title insurance companies determine whether the title is insurable based on a review of the public records. Title insurance is considered the best defense of title. Title insurance company will defend any lawsuit based on an insurable defect and pay claims if the title proves to be defective. Company usually issues a preliminary report of title or a commitment to issue a title policy. Premium for the policy is paid once at closing not annually like other types of insurance.

Chain of Title

Record of a properties ownership over a period of time. In Pennsylvania recorded deeds can be traced to the 1770s. If ownership cannot be traced through an unbroken chain a gap or cloud in the chain of title is said to exist. In these cases the cloud on the title makes it necessary to establish ownership by a court action called a suit to quiet title.

Priority

Refers to the order of rights in time. Situations can affect the priority of rights - who recorded first - which party was in possession first - who had actual or constructive notice.

Title insurance extended coverage

Standard coverage plus: Property inspection, including unrecorded rights of persons in possession Examination of survey Unrecorded liens not know of by the policyholder

Abstract of Title

Summary report of what the title search found in the public record. Person who prepares this report is called an abstractor. Abstractor searches all the public records and then summarizes the various events and proceedings that affected the title throughout its history. After examining the abstract an attorney prepares a written report about the condition of the ownership. The report is called an attorney's opinion of title.

Recording

The act of placing documents in public record. All recording acts essentially provide that any written document that affects any estate, right, title or interest in land must be recorded in the county where the land is located to serve as public notice. In Pennsylvania to be eligible for recording a document must be in writing and properly executed (signed). The document also must be acknowledged before a notary public.

Title Evidence

Title insurance

Marketable Title

Under the terms of the typical real estate agreement of sale the seller is required to deliver marketable title to the buyer at closing. To be marketable a title must: - disclose no serious defects and not depend on doubtful questions of law or fact to prove its validity; - not expose a purchaser to the hazard of litigation or threaten the quiet enjoyment of the property: - convince a reasonably well-informed and prudent person, acting on business principles and with knowledge of the facts and their legal significance, that she could sell or mortgage the property at a later time; - Be insurable by a reputable title insurance company at ordinary rates

Subrogation

When a title company makes a payment to settle a claim covered by a policy, the company generally acquires the right to any remedy or damages available to the insured called subrogation