Chap 10 Psi: Transfer Of Property

Front 1

1. Deeds- Transfer of Title-

Back 1

-

Front 2

a. By Descent

Back 2

every st has Statue of Decent & distrib. When they die intestate-passd 2 heirs by statute

Front 3

b. By Will

Back 3

testator (willmaker) death…will must be filed w court and probated to pass title to devisees…although title upon death auto vests in such devisees (will) or distributes (intestate). Title to prop may not be in abeyance.

Front 4

c. By involuntary alienation

Back 4

trans wout owners consent

Front 5

i. Escheat

Back 5

person dies intestate and has no heirs or abandons prop…title passes to the state

Front 6

ii. Eminent domain-

Back 6

-

Front 7

iii. To satisfy debts

Back 7

foreclosed

Front 8

iv. Natural forces- accretion (slow movement of soil). Erosion- gradual . Avulsion- sudden by eater or quake. Reliction- new land acquired as water recedes. -

Back 8

-

Front 9

v. Adverse possess

Back 9

actual, visible, hostile, notorious, exclusive & continuous; tack on prev owners

Front 10

d. Voluntary Alienation either

Back 10

gift or sale- to trans, owner must use a deed or something for conveyance.

Front 11

i. Deeds

Back 11

written instruments of conveyance from grantors to grantees.

Front 12

1. General Warranty-

Back 12

-

Front 13

a. Greatest protection of any deed-

Back 13

-

Front 14

b. Covenant of Seisin

Back 14

grantor has title and possession and has the rt to convey

Front 15

c. Covenant against encumb- G says prop has no liens\ecum except in deed-

Back 15

-

Front 16

d. Covenant of quiet enjoyment

Back 16

gd against a 3rd party

Front 17

e. Covenant of further assurance

Back 17

guarantees to make gd against any 3rd parties

Front 18

2. Special Warranty deeds

Back 18

G only warr deed not encumb dur time held, except in deed

Front 19

3. Bargain & Sale deed-

Back 19

-

Front 20

a. Not used in

Back 20

Colo per Todd-

Hint 20

-

Front 21

b. Only implied war that grantor holds interest in prop. G may add warranties to deed making like a special warranty deed-

Back 21

-

Front 22

4. Quit claim deed-

Back 22

-

Front 23

a. No warranties and conveys only such interest , if any, that the grantor may have when the deed is delivered but conveys that interest completely. -

Back 23

-

Front 24

b. Often used to

Back 24

cure a defect in title.

Front 25

e. Types of proof of title-

Back 25

-

Front 26

i. Abstract of title and lawyer’s opinion-

Back 26

-

Front 27

1. Abstract of title

Back 27

condensed history of all instruments or record affecting title

Front 28

2. Attorney’s opinion

Back 28

buyers attorney examines for flaws & prepares written opinion

Front 29

ii. Torrens system-

Back 29

-

Front 30

1. A cert of title accompanied by the owner’ signature is filed w the register’s office and used to verify future transfers-

Back 30

-

Front 31

2. Title to Torrens- registered prop never can be acquired thru adverse possession-

Back 31

-

Front 32

iii. Certificate of Title prep by an attorney

Back 32

wout prop of an abstract. Attorney gives opinion. In not a title ins policy

Front 33

iv. Title Insurance-

Back 33

-

Front 34

1. Protects from defects in title(forgery or defect in the public record, other not listed) -

Back 34

-

Front 35

2. Most will not cover situations arising form question of survey, defect of which policyholder has knowledge of, or unrecorded documents-

Back 35

-

Front 36

3. It is an indemnity contract. -

Back 36

-

Front 37

2. Escrow Process-

Back 37

-

Front 38

a. Parties agree on

Back 38

3rd party to act as escrow agent

Front 39

b. Escrow agent holds deed and when title conditions and other reqs of escorw agree met….records deed. Then the tile passes and the sale is complete. -

Back 39

-

Front 40

3. Deed Requirements-

Back 40

-

Front 41

a. Reqs for a valid conveyance-

Back 41

-

Front 42

i. Grantor- legal age, legal competent to convey-

Back 42

-

Front 43

ii. Grantee (buyer). Named in deed in a way they can be identified. -

Back 43

-

Front 44

iii. Consideration

Back 44

something of value- usu dollars

Front 45

iv. Granting clause

Back 45

grantor intends to convey prop

Front 46

v. Habendum clause

Back 46

follows granting clause when need to define the terms of ownership

Front 47

vi. Acknowledgment

Back 47

signature is voluntary and genuine.

Front 48

vii. Delivery and acceptance

Back 48

by grantor either actual o implied acceptance by grantee

Front 49

viii. Exceptions and reservations

Back 49

subject to's….encumbrance, reservations, limitations that affect title being conveyed….such liens ,easements and restrictions

Front 50

b. Recording of the Deeds and conveyance of title-

Back 50

-

Front 51

i. Title usu passes when executed deed is

Back 51

delivered and accepted.

Front 52

ii. Exceptions

Back 52

-

Hint 52

-

Front 53

1. Torrens prop

Back 53

titled trans when examined and accepted for registration

Front 54

2. Closing in escrow

Back 54

if escrow does not close, no title passes

Front 55

iii. Recording

Back 55

gives notice to the world one has rts in the prop

Front 56

iv. An unrecorded deed is

Back 56

valid btwn 2 parties to a trans.

Front 57

c. Legal vs. Equitable Title (broker only) -

Back 57

-

Front 58

i. Equitable conversion-

Back 58

-

Front 59

1. Doc of law gives title to prop to a buyer under executory contract in certain situations b4 legal title has been trans to buyer-

Back 59

-

Front 60

2. Upon creation of binding offer…sellers holds legal title for the buyer, who has equitable title-

Back 60

-

Front 61

3. Seller holds legal title as security for purchase price-

Back 61

-

Front 62

4. Uniform vendor and Purchaser risk act- risk of loss shifts to buyer only if poss or legal title has been trans to buyer-

Back 62

-

Front 63

ii. Equitable title (insurable interest) -

Back 63

-

Front 64

1. Buyers ownership int in prop which occurs when off to purchase becomes binding-

Back 64

-

Front 65

2. Interest may by conveyed by deed or will-

Back 65

-

Front 66

3. Interest converts to legal title upon delivery & accept -

Back 66

-

Front 67

d. RESPA

Back 67

( RE Settlement Procedures Act)

Front 68

i. Ensures buyer and seller know all

Back 68

settlement costs b4 closing

Front 69

ii. Reqs-

Back 69

-

Front 70

1. Lenders give copy of info booklet “Settle costs and You” -

Back 70

-

Front 71

2. Lenders must provide gd faith est of costs no later than

Back 71

3 biz days after loan app

Front 72

3. Closing costs must be prepared with a

Back 72

Uniform Settle Stmt ( HUD 1)

Front 73

4. Prohibits kickbacks & ref fees when no services rendered

Back 73

used to pay Todds marketing

Front 74

iii. Only apply to trans new first mort referral FEDERAL loans for 1 family to 4 family dwellings -

Back 74

-

Front 75

4. Tax Benefits-

Back 75

-

Front 76

a. Capital gains-

Back 76

-

Front 77

i. 1997 Married couples excluded

Back 77

$500k sale of prin residence filing jointly. Individuals $250K

Front 78

ii. No limit as long as occupied prop for

Back 78

2 yr of last 5.

Front 79

iii. 1998 law lowers req holding per for nocorp taxpayer from

Back 79

18 to 12 mo for long –term cap gain

Front 80

b. Penalty free withdraws from IRAs

Back 80

first time buyers get down pymnt from IRA wout penalty…limit $10K

Front 81

c. Home related expense that are tx deductible (4 kinds)-

Back 81

-

Front 82

i. Some loan orig fees-

Back 82

-

Front 83

ii. Interst pd on mort on first and second homes-

Back 83

-

Front 84

iii. RE taxes but not penalties for late payment-

Back 84

-

Front 85

iv. Disc pts on loans. Prepayment penalties on loans-

Back 85

-

Front 86

5. IRS Regulations-

Back 86

-

Front 87

a. Indep Contractors\employees

Back 87

meet 3 reqs can est Indep contactor status.So agents can rep on IRS 1040 shed C as self- employed

Front 88

i. Must have current

Back 88

RE lic. Written contract with B- agent not treated as emp. 90% must be sales production- not on hrs worked

Front 89

b. 1099 Forms-

Back 89

-

Front 90

i. Agents have to report closings to IRS w Form

Back 90

1099S- sales or exchanges w 4 or fewer units

Front 91

ii. Comm pd to agents by brokers must be reported on

Back 91

1099 MISC

Front 92

c. Declarations of value ?????? -

Back 92

-

Front 93

i. Docs of stmts of value that accompany every deed\contract need be

Back 93

recorded w registrar

Front 94

ii. Used for determining

Back 94

conveyance tax owed to state or muni

Front 95

d. Imputed Interest-

Back 95

-

Front 96

i. A term that describes interest that is considered to be paid for tax purposes even though no interest payment has been made. Imputed interest is used by the IRS as a means of collecting tax revenues on loans or securities that do not pay interest, or where the stated interest is particularly low. Imputed interest is calculated based on the actual payments that will be - but have not yet been - paid. The interest is important for discount bonds, such as zero-coupon bonds, and other securities that are sold below face value and mature at par. -

Back 96

-

Front 97

ii. IRS will impute or assign interest compute mo on an installment contract (Contract for Deed- a contract for sale of RE under which the sale price is pd in installment by the purchased, who is in possession and holds equitable title although actual title is ret by seller- also called land contract) that fails to include in rat or states very low int rate. -

Back 97

-

Front 98

iii. Rate based on AFR

Back 98

Applicable federal Rate- 3 rates depend on if debt instruments is

Front 99

1. Short term- less than 3 yrs-

Back 99

-

Front 100

2. Midterm- 3-9 yrs-

Back 100

-

Front 101

3. Long-term- over 9 yrs-

Back 101

-

Front 102

iv. Installment sales of less than

Back 102

$3k are not covered.

Front 103

v. Although NO tax pd buyers may deduct

Back 103

to tax purposes on unpd balances!

Front 104

6. 1031 tax-deferred exchange-

Back 104

-

Front 105

a. 1031 IRS Code

Back 105

defer tax of cap gains by exchanging prop. Have tax liability only if add capita\prop is req’d

Front 106

b. Props must be of

Back 106

like kind- income or investment, excludes dealer prop or residences.

Front 107

c. Additional cap or personal prop incl in a trans to even out the exchange is considered boot

Back 107

the party rec the boot is taxed at the time of the exchange.

Front 108

d. Must use a qualified

Back 108

intermediary to hold the money in the tax-deferred exchange.