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43 Cards in this Set

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  • Back
What are the 4 methods of title assurance?
(1)Covenants of title
(2)Examination of title (look at legal records, or abstract of title)
(3)Registered title: alternative to recording system
(4)Title insurance
When are present covenants breached, if at all?
as soon as deed is delivered. SOL begin when deed is delivered
Name the 3 present covenants for title
(1)Covenant of seisin
(2)Covenant of right to convey
(3)Covenhant against encumbrance
What is the covenant of seisin?
warrant that the grantor is the owner of the estate described in the deed. If a borrower who purchases with full knowledge of a title defect can recover damages for breach of seisin
What is the covenant of the right to convey?
warrants that the grantor has legal right to transfer title
What is the covenant against encumbrance?
warrants that there are no encumbrances on the land. This generally means a right or interest held by a 3rd party that reduces the value or restricts the use of the land. Typically, easements, mortgages, restrictive covenants, water rights, etc fall here
What happens if there is an obvious defect that affects the physical condition of the land?
(1)Permanent and readily visible improvements (power lines, roads, RR tracks), clearly indicate to any buyer that the land is subject to an easement. Therefore, the buyer has presumably discounted the purchase price and can’t expect covenant against encumbrances will cover the defect.
(2)Traditional rule: covenant extends to all encumbrances unless its language indicates otherwise
When are future covenants breached?
breached at some future date when actual injury (constructively evicted by someone holding superior title or suffers damage) accrues to the warrantee
What are the 3 future covenants?
(1)Covenant for future assurance
(2) Covenant of warranty
(3) Covenant of quiet title
How does constructive eviction work with future covenants?
when one who holds paramount title to the Plaintiff’s interferes with the right of possession
How does the existence of superior title work with future covenants?
doesn’t amount to an eviction, and thus none of the future covenants are broken
What is the covenant for future assurance?
a promise that the grantor will execute any additional documents and take any action that are reasonably necessary to perfect the grantee’s title
What is the covenant of warranty?
warrants that the grantee’s possession and enjoyment of the property will not be disturbed by anyone holding superior title. If it should be, the grantor agrees to defend and indemnify the grantee who suffers an eviction
What damages are available under the covenant of warranty?
(1)Some: value of land at time of eviction; others add cost of improvements since purchase.
a.If improvements are allowed: One who is permitted to recover for improvements to real property is entitled to the reasonable value of his labor and materials, or to the amount which his improvements have added to the market value of the land, whichever is smaller.
(2)CL: value of the land at the time warranty was made.
(3)Majority: the purchase money with interest from the time of eviction
What is covenant of quiet title?
same as covenant of warranty
What are the rights of a grantee's successors under present covenants?
(1)Majority of Stats: grantee’s successors cannot sue the original grantor for breach of a present covenant. A present covenant is breached when the deed is delivered.
(2)Minority: allow a successor to sue. These states reason that the grantee’s deed to a successor is an implied assignment of the grantee’s existing cause of action against the grantor
What are the rights of a grantee's successors under future covenants?
Future covenants do run with the land to grantee’s successors. Thus the grantee may sue the original grantor for breach
When does estoppel by deed work?
a grantor uses a warranty deed to purportedly covey title to land he does not own to an innocent grantee. Later, if the grantor acquires title to the land, it automatically passes to the grantee.
NB: (Some courts have limited this to warranty deeds, others just say there needs to be a breached covenant)
What is the effect of estoppel by deed?
the grantor is estopped from claiming title that is superior to grantee. Also, if the grantor later tries to give title to another, he can’t as he has nothing to give
Does estoppel by deed apply to leases with warranties?
What is feeding the estoppel?
legal title passes instantly to the grantee once it was acquired by the grantors, thus allowing the former to sue a stranger in ejectment without first bringing a bill in equity to acquire the title from the grantor
Explain the process by which one gains title insurance by having an attorney's opinion on title based on examination of public records.
(1)Attorney: will do a title search and set forth an opinion.
(2)Abstract of title: a non-lawyer who specializes in searching titles (an abstractor) to prepare a written summary (and abstract) of the title to the land. The abstract will briefly describe every deed, mortgage, judgment, and other document affecting title to the land that has ever been entered into public records. The attorney will then base their opinion on from this abstract
What are the functions of the attorney's opinion of title?
(1)If the opinion discloses unacceptable title defects, the buyer can simply refuse to proceed with the purchase.
(2)If the buyer purchases the property and later discovers that the tile opinion was N prepared, he can recover compensatory damages by suing the attorney for malpractice. Or if the abstractor is to blame, the buyer can sue them. A problem exists if the buyer didn’t directly employ the abstractor:
(a)Traditionally, buyer had no COA if the abstractor was hired by another party (ie the seller) due to lack of privity.
(b)Modern courts: usually find the buyers reliance on the abstract is reasonably foreseeable and thus permit suit even without privity.
(3)This use to be the dominant way to protect title, but with title insurance it is less important
What are the dangers to consider with any title?
(a)Defects in the title
(b)Hidden defects not disclosed by the record
(c)Cost of defending the title against attacks
Name a few hidden title defects no notice of which ordinarily appear on record
(a)Disability of a grantor in the chain of title
(b)Forgery of a deed, mortgage or other instrument in the chain of title
(c)Fraudulent representation of marital status by a grantor in the chain of title
(d)Mistaken identity of a record titleholder and a grantor due to similar or identical names
(e)Errors in the record
(f)Errors in the examination of the record
(g)Undisclosed heirs
(h)Exercise of a power of attorney after death of the creator of the power
(i)Defects in conveyances in the chain of title due to lack of delivery.
(j)Unjustified attack (person would be forced to pay to defend, even though the ultimate decision is in his favor.
(k)Interpretation: differences in opinion of attorneys
What is title insurance?
(a)A K of indemnity between the issuing company (insurer) and the property owner or mortgagee (insured).
(b)Insurer promises to compensate or indemnify the insured against losses caused by covered title defects.
(c)It is retrospective in that it protects only against title defects that already exist at the time the title is transferred, not those that may arise in the future
What are the 2 distinct responsibilities assumed when a title insurer presents buyer with both preliminary title report and policy of title insurance?
(a)The insurer serves as an abstractor of title – and must list all matters of public record regarding the subject property in its preliminary report.
(b)A title insurer is liable for his N failure to list recorded encumbrances in preliminary title reports
Why would anyone want to wear a belt and suspenders?
by having an abstractor prepare a title opinion, and by having title insurance, you have two opinions, both of which can be sued
Name all 6 elements of adverse possession.
(1)Actual possession
(2)Which is uninterrupted
(3)Open & Notorious
(4)Hostile & exclusive
(5) Under a claim of right made in good faith
(6)For statutory period
Explain actual possession
Possession is possession and dominion as ordinarily marks the conduct of owners of property of like nature and condition, seasonal occupancy will not defeat a claim of adverse possession
What is uninterrupted?
Must stay on the land as the land will allow (like above)
Explain the concept of tacking.
A purchaser may tack the adverse use of its predecessor in interest to that of his own where the land was intended to be included in the deed between them, but was mistakenly omitted from the description.
(a)Privity: Tacking of adverse possession is permitted if the successive occupants are in "privity."
(b)However: the requirement of "privity" is no more than judicial recognition of the need for some reasonable connection between successive occupants of real property so as to raise their claim of right above the status of the wrongdoer or the trespasser
Explain open and notorious
(1)Must be so visible and obvious that a reasonable owner who inspects the land will receive notice of an adverse claimant.
(2)Owner is charged with such notice that a diligent inspection would reveal, regardless if he does so or not
Explain hostile and exclusive
(1)Must not share with either the true owner or the general public.
(2)Must exclude 3rd parties only to the extent that a reasonable owner would do so
Explain under a claim of right made in good faith
(1)They must believe in good faith that he owns title to the land.
(2)Most courts hold that a willful trespasser has acquired no title
Explain for the statutory period.
(1)Most SOL do not run against non-possessory interest. Therefore an adverse possessor occupies land of an owner with only a life estate, the statute would not have run at all against the remaindermen’s interest.
(2)Also limited to those with disabilities, so that interest of minors, insane people, etc may survive well beyond the basic period
What must be shown in order to start the running of the SOL against a cotenant?
(1)gave actual notice to the tenant out of possession that he was claiming adversely, or
(2)that the tenant out of possession had received notice of such claim of the tenant in possession by some act which would amount to an ouster or disseisin
What are the acts that establish ouster?
(1)actions of such nature to impart information and notice to the cotenant that an adverse possession is intended.
(2)Notice need not be formal
When may an adverse claimant be credited w/ possession of an entire plot?
(1)the claimant is operating under color of title (a defective deed describing the land), or
(2)when the land is marked by clear and definitive boundaries
How are a mortgagor's rights affected by adverse possession?
(i)A stranger’s adverse possession does not bar the mortgagee’s rights to the property.
(ii)Another view is that the mortgagee takes no better title then the owner.
(iii)Another view is that the time period begins to run against a mortgagee only at such time as the mortgagee has a right to actual possession or foreclosure
How does one possess mineral rights thru adverse possession?
To possess a mineral estate by adverse possession, one must undertake the actual removal thereof from the ground or do such other act as will apprise the community that such interest is in exclusive use and enjoyment of the claiming party
How can adverse possession affect boundary disputes?
(i)Adverse possession can take boundary lines
(ii)Besides adverse possession, there are four other ways:
(a)Boundaries by agreement
(b)Boundaries by acquiescence
(d)Boundary determination by a common grantor
Explain the effects of Marketable Title Acts
(a)If an owner has a clear record chain of tile back to a root of title (that is a deed or similar document that crated or transferred title) for a specific period (SOL) then title is free from all rights or interest that were recorded before the root title.
(i)Interest held by the federal government
(ii)Utility easements
(iii)Mineral interest
(iv)Water rights