Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
46 Cards in this Set
- Front
- Back
|
Who regulates policies and procedures regarding recording legal documents? What does recording entail? |
Policies Established by state laws -note date and time of filing -a recording number assigned - a copy of document put into public record -List document in grantor and grantee indexes -return original doc |
|
|
Recording System allows us to post claims Gives constructive or legal notice **** establishes priority of interest " I.e., "first in time, first in right" used by most states |
See front |
|
|
2 questions: 1) is a deed considered valid and title passed if it has not been recorded? 2)Does recording prove validity of the document? |
1)Yes it's still valid and title is transferred. Title transfers when the grantor signs the deed and this is delivered and accepted by the grantee However not recording risks becoming subordinate to a claim by a third-party 2)no |
|
|
Is the buyer expected (as a part of due diligence process) to inspect or have someone inspect both the property (i.e., home inspection)and the public records(ie., title search)? |
Yes |
|
|
Types of legal documents that are recorded |
Deeds, mortgages and trust deeds, contracts for deed, easements and long-term leases |
|
|
What does "executed" in terms of a document mean? |
It has been signed |
|
|
What does it mean for a document to be "acknowledged"? why is this important? And is it required? |
Acknowledged means it is notarized This confirms that the transfer is voluntary and not under duress Most states require documents to be notarized/acknowledged to be recorded |
|
|
A deed that is not recorded lacks ----- notice? |
Lacks constructive notice of ownership. Constructive notice means legal notice |
|
|
Recording fees and transfer taxes (in North Carolina known as excise tax) |
State laws determine if there is a charge for the property transfer (called deed tax, documentary fees, tax stamps or excise tax |
|
|
Who pays tax stamps/deed tax/documentary fees/excise tax? |
Taxes typically paid when the deed is recorded and can be paid by either the seller or the buyer *****but in North Carolina typically paid by the seller |
|
|
What is subordination? |
It is the clause in a mortgage or deed of trust in which the lender permits a subsequent mortgage to take priority. Allows mortgages to maintain their original position, if a prior mortgage is refinanced, the secondary mortgage continues its subordinate position |
|
|
What does marketable title mean? And how is it determined? |
marketable title (or merchant able) means ownership free from reasonable doubt, which is the buyers goal to obtain
-Title search Examiner (attorney or trained title examiner reviews public records, searched from present to original source. Process establishes chain of title The goal is to seek/find unbroken chain. If errors or missing documents are found (broken chain) the there is said to be a cloud of title The seller will need to clear title in order to convey the property **this is the sellers responsibility Small issues are handled by a quit claim deed or a correction deed. Larger issues may require a quiet title suit ** some states have a marketable title act which requires title searches go back for a certain period of years Nc law uses 30 year requirement
-Abstract of title & attorney's opinion of title An abstract of title is a summary of all recorded documents affecting title to a given piece of land created through the title search ***The seller is expected to furnish an updated abstract showing all current and past recorded interests. Buyers attorney examines abstract tracing chain of title and renders title opinion or certificate of title which is what it's called in nc this shows current status of rights and lists objections -Title insurance ***best method for assuring marketable title. Title search is performed by examiner, title report and commitment will list current (not past) title status and title defects such as mortgages, easements and other current recorded encumbermebts The Title report is a commitment to insure. It lists exceptions like defects and encumbrances that have been discovered or that may exist and are not covered by the policy there are standard exceptions (which are items never covered) and special exceptions (e.g clouds specific to this property discovered by examiner |
|
|
Title insurance policies are also known as________ contracts. What is a standard coverage policy and an extended coverage policy? When are these premiums paid |
Aka Indemnity contracts Standard coverage policy Protects against all title problems found after closing and will not cover defects found before closing. Covers such things as errors in title examination, errors in the abstract, errors in the public record, hidden defects such as forgery, incompetency, misrepresented marital status and improperly prepared deeds. ****Unlike most insurance, the premium is paid only once when the policy is issued at closing |
|
|
Extended coverage policy |
Protects against the same types of problems as the standard coverage policy but also protects against problems that are not a matter of public record that would probably be discovered by inspecting the property For example: parties in possession or adverse possession or matters of survey such as encroachments, gap period typically from the time the commitment is issued until the deed is recorded |
|
|
Types of policies: owners policy, lenders mortgage policy |
New buyer will receive an owner's policy (protects the owner and errors while they have an interest) Coverage cost is based on the sales price of the property this is an indemnity (which Will compensate or reimburse the owner against losses as a result of title defects found after closing) Paid for by seller or buyer. Coverage continues until the property changes title
Lenders mortgagee policy Protects lender. Coverage based on loan amount, often paid by buyer but can be paid by either buyer or seller, coverage diminishes with each loan payment and ceases to exist when loan satisfied |
|
|
What is a Quiet title suit/action to quiet title? it does what? |
Court hearing to determine ownership, recognize other valid claims, and quiet invalid claims. ****Used to clear cloud of title or establish ownership under adverse possession |
|
|
What is a Lis pendens? |
When notices sent it to interested parties a lis pendens has been filed. It is a recorded notice of a pending lawsuit affecting title to property **all parties with a claim are to present evidence of a claim Court hearing and a judge determines the claim |
|
|
Settlement statement Debit to buyer credit to buyer debit to seller credit to seller |
Debit to buyer anything that increases amount of money the buyer must bring to closing examples are: sales price, recording warranty deeds, loan origination or discount points if paid by buyer Credit to buyer is anything that decreases the amount of money the buyer must bring to closing Examples include earnest money, loan amount, interest on assumed mortgage, or seller financing Debit to seller anything that decreases the amount of money the seller takes from closing examples brokerage fee paying off existing loan or seller financing Credit to seller Anything that increases the amount of money the seller takes from closing, i.e.. sales price |
|
|
Proration |
Certain costs such as utilities, owner association dues, and taxes are prorated (or divided fairly )between the buyer and the seller as of the date of settlement The prorated amount will always be equal with a debit to one party and a credit to the other ***If the payment was made in advance, calculate the amount owed on the buyer side of the billing period. If the payment will be made in arrears, calculate the amount owed on the seller side of the billing period. |
|
|
Proration calculation that is always the same |
Amount for the billing divided by the days in the billing period times the days the person owns Total amount/total days x days owed
*** for the exam 360 days per year/30 days per month are used |
|
|
Taxes are $1800 per year and have been paid, closing is november 23rd |
$1800/360= $5 per day $5 x 37 days= $185 debut buyer credit seller. To calculate days determine what is left from nov. 23 through December 30th***remember for the exam there are 360 days in a year and 30 days in a month |
|
|
HOA dues are $300 per quarter and have not been paid for the first quarter. Closing is February 14th |
$300/90 days= $3.33 per day $3.35 x 44 days = $146.52 debit seller, credit buyer |
|
|
A prorated item paid in advance of settlement will be a —— to the buyer A prorated item paid in arrears will be a——to the buyer A New loan will always show on the settlement as a buyer—— |
Debit to buyer Credit to buyer Credit |
|
|
Does An attorney's opinion of title guarantee the buyer obtains marketable title? |
No Though It can disclose un released liens; disclose personal judgments against the seller; disclose the amount and status of property taxes and special assessments |
|
|
How is excise tax computed? |
Purchase price divided by $500 |
|
|
How is excise tax computed? |
Purchase price divided by $500 (Always round up to next dollar to make even #) Paid by seller Registrar of deeds puts a paid stamp on the face of the deed |
|
|
What sellers pay at settlement |
-If property taxes or HOA dues are not paid or are paid in arrears the sellers will pay the portion of the year they have on the property (The seller owns on the day of closing) -Sellers pay to have the deed prepared -sellers pay the excise tax -sellers return the due diligence fee that was previously paid (will be credited back to the buyers and debited to the sellers) -sellers typically pay brokers fee -sellers pay any current loan against property (unless buyers are assuming) -sellers pay any charges to clear title defects |
|
|
What do buyers pay at settlement |
Pays Sales price Title insurance Recording deed fee Closing attorney costs If financed will pay recording of mortgage or deed of trust Loan settlement costs Pest inspection/survey etc. Prorated prop tax or HOA dues |
|
|
What do buyers pay at settlement |
Pays Sales price Title insurance Recording deed fee Closing attorney costs If financed will pay recording of mortgage or deed of trust Loan settlement costs Pest inspection/survey etc. Prorated prop tax or HOA dues |
|
|
NC machinery act |
Governs all taxation including property taxes. States at the time of assessment the assessed value of the property must be market value |
|
|
What do buyers pay at settlement |
Pays Sales price Title insurance Recording deed fee Closing attorney costs If financed will pay recording of mortgage or deed of trust Loan settlement costs Pest inspection/survey etc. Prorated prop tax or HOA dues |
|
|
NC machinery act |
Governs all taxation including property taxes. States at the time of assessment the assessed value of the property must be market value |
|
|
Octennial reappraisal & horizontal adjustment |
Real property must be reassessed every eight years, horizontal assessment: in the fourth year following octennial reappraisal, the city or county may uniformly adjust property up or down by an across-the-board percentage *** actual tax rates can be adjusted annually by the governing municipality to meet budget needs |
|
|
Appraisal vs assessment Market value and assessed value |
Appraisel is an opinion or conclusion of the value of property , the process of communicating value Assessment is the process of determining value for ad valorem taxes Market value is the price estimated in terms of money that a property would bring with a reasonable buyer and a reasonable seller making reasonable decisions to buy or sell Assessed value is the value of property estimated for ad valorum taxes |
|
|
Brokers responsibilities at settlement |
-The broker is responsible for the accuracy of the settlement statement (brokers are not responsible for the specific lender details) There are no legal requirements that the parties physically attend the settlement meeting however all the required documents must be signed by parties, all funds must be presented and **brokers who fail to attend may be in violation of their fiduciary duty's to the client |
|
|
Brokers responsibilities at settlement |
-The broker is responsible for the accuracy of the settlement statement (brokers are not responsible for the specific lender details) There are no legal requirements that the parties physically attend the settlement meeting however all the required documents must be signed by parties, all funds must be presented and **brokers who fail to attend may be in violation of their fiduciary duty's to the client |
|
|
When is the settlement statement delivered |
Typically delivered at time of settlement with signatures or the broker must deliver it ****no later than five days after closing |
|
|
Must the seller pay for a pest inspection on a VA loan? |
Yes! |
|
|
Should a pending loan payment be prorated? |
Never |
|
|
Should a pending loan payment be prorated? |
Never |
|
|
Who pays to record the deed of trust? |
Buyer |
|
|
Should a pending loan payment be prorated? |
Never |
|
|
Who pays to record the deed of trust? |
Buyer |
|
|
How should you handle tenant security deposit's on settlement? |
Debit seller credit buyer the full amount |
|
|
What happens to the due diligence fee at settlement? And what happens with the buyers earnest money at settlement? |
Due diligence fee is a debit to the seller and a credit to the buyer For earnest money the buyer receives credit (single entry) |
|
|
A broker reviewing the closing attorney's closing disclosure before settlement would start with which document to determine whether the charges are correct? |
The sales contract/offer to purchase between the seller and the buyer |
