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;
130 Cards in this Set
- Front
- Back
|
Title |
The right to ownership of the land. The word title is also used to refer to the documentary evidence of the right of ownership. The word title refers to a summation of all things property owners possess to prove and protect their ownership interest in property.
Example - deed |
|
|
2 functions of Title |
1. Represents the bundle of legal rights the owner possesses in the real estate. 2. Denotes the fact that if proven, enable a person to recover or retain ownership or possession of a parcel of real estate. |
|
|
Alienation |
Transfer of title, or act of transferring property to another. A parcel of real estate may be transferred voluntarily by sale or gift, or it may be taken involuntary by operation of law. In addition, it may be transferred by will or descent after a person has died. |
|
|
Voluntary Alienation |
Most transactions utilizing real estate brokers involve voluntary alienation (transfer) of title. The transfer may be made by either gift or sale with the wishes and consent of the property owner. To transfer title by voluntary alienation during an owner’s lifetime, that owner must use some form of deed. |
|
|
Deed |
A written instrument by which an owner of real estate intentionally conveys right, title, or interest in the parcel of real estate to another. It is evidence of title. |
|
|
Grantor |
Owner of the deed. A deed is executed (signed) only by the grantor(s). |
|
|
Grantee |
Person that receives the title. The grantee does not sign the deed. |
|
|
Legal terms for parties in real estate transactions. |
In reference to parties to a real estate instrument, such as a deed, the parties are referred to in legal terms such as grantor and grantee. The “OR” is the giver of the paper, and the “EE” is the receiver of the paper. |
|
|
Examples of Giver and Receiver |
Refer to page 84 |
|
|
Requirements for a Valid Conveyance North Carolina |
A valid deed must contain certain essential elements, including the following: - Must be in writing - The grantor must have the legal capacity to execute a deed - The grantee named must with reasonable certainty must be identifying - There must be adequate words of conveyance - There must be an accurate legal description of the property conveyed - The deed must be signed by the grantors - The deed must be delivered and voluntarily accepted by the grantee |
|
|
Requirements to be a grantor |
Must have a legal existence, be of lawful age, and be legally competent in order to convey title to real estate. A grantor generally is held to have sufficient mental capacity to execute a deed if that grantor is capable of understanding the action. A deed executed by a person who is mentally impaired (for example - intoxication) is only voidable - it is not void. A deed executed by a person who has been judged legally incompetent is considered to be void. |
|
|
A _______ conveys property to a ________ |
A grantor conveys property to a grantee |
|
|
A ________ receives property from a ________ |
A grantee receives property from a grantor |
|
|
A _______ is the instrument that conveys property from a grantor to a grantee |
deed |
|
|
Identification of a grantor and grantee |
To be valid, a deed must name both the grantor and the grantee in a such a way that they are readily identifiable. Furthermore, the grantee must be a real person, either a natural person or an artificial, such as a corporation. A deed naming the grantee as a fictitious person, a company that does not exist, or a society or club that is not property incorporated is considered void. The grantee cannot be dead, but may be a minor. The minor may receive real property via deed but may not legally convey the property (sign a deed) until after turning 18. |
|
|
Consideration |
Consideration (something of value) of some form must be stated. To be legally binding, the deed must express adequate consideration. Consideration is the price paid for the promises stated in the deed. While economic value (e.g. money) is the most common form of consideration, consideration does not have to be money. Deeds can state that the property is being exchanged for "love and affection." Deeds in many, if not most, cases do not recite the actual sales price. Instead, they simply recite "for $10 paid and good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. |
|
|
Granting Clause |
Words of conveyance. A deed of conveyance transfers a present interest (freehold estate) in real estate, and it must contain words that state the grantor's intention to convey the property at this time. An expression of intent to convey at some time in the future is inadequate. |
|
|
Words of conveyance |
Depending on the type of deed and the obligations agreed to by the grantor, the wording is: = generally convey and warrant - grant, bargain, and sell or - remise, release, and quitclaim |
|
|
Legal Description |
To be valid, a deed must contain an acceptable, accurate, legal description of the real estate conveyed. Land has been described adequately if a competent surveyor could locate the property from the description used. |
|
|
Signature of grantor |
To be valid, a deed must be signed by all the grantors (or their authorized agents) named in the deed. In NC, if the grantor is married, both the grantor and the grantor's spouse must sign the deed even if only one spouse is named in the deed. |
|
|
Delivery and Acceptance |
Before a transfer of title by conveyance can take effect, there must be delivery and acceptance, that is, actual delivery of the deed by the grantor and either actual or implied acceptance by the grantee. Delivery may be made by the grantor to the grantee personally or to a third party who is authorized by the grantee to accept the deed, such as a lawyer. |
|
|
When is title said to pass |
When a deed is delivered and voluntarily accepted. In NC, the effective date of the transfer of title from the grantor to the grantee is the date of delivery of the deed itself. |
|
|
Acceptance in NC |
Recordation of the deed by the buyers or their agent is recognized as acceptance |
|
|
Nonessential elements of a deed |
Nonessential elements often appear in deeds but are not required for validity. Include the following: - Deeds do not have to be witnessed - Deeds do not have to be dated, but may be wise - Deeds do not have to include a statement as to the exact amount of consideration (amount paid for property) - Deeds do not have to be acknowledged (notarized) - Deeds do not have to be recorded to be valid, but under the Connor Act, the grantees must record the valid deed to protect their interest as to third parties under law - In NC, Effective in 1999, deeds do not have to be sealed in NC to be valid. Standard deed forms may continue to have the word seal after the signature; however, it is no longer required to create a valid deed. Signing under seal does have certain legal advantages such as extending the statute of limitations protecting the parties' rights from 3 to 10 years. |
|
|
Notarization and Recordation |
Acknowledgement (Notarization) is necessary before a deed can be recorded, and recording a deed is necessary to protect the grantee's interests in property. |
|
|
Types of Deeds |
The General Warranty Deed The Special Warranty Deed The Quitclaim Deed in NC - several types of special purpose deeds are used |
|
|
5 Covenants of General Warranty Deed |
1. Covenant of seisin and the right to convey 2. Covenant against encumbrances 3. Covenant of quiet enjoyment 4. Covenant of further assurance 5. Covenant of warranty forever These covenants in a general warranty deed are not limited to matters that occurred during the time the grantor owned the property; they extend back to it's origin. The first 3 are most important. |
|
|
General Warranty Deed |
For a purchaser of real estate, a General Warranty Deed provides greater protection than any other deed. It is the best deed for the grantee, but it gives the grantor the greatest degree of liability. It is refereed to as a general warranty deed, a full covenant and warranty deed, or simply a warranty deed because the grantor is legally bound by certain basic covenants or warranties. |
|
|
Covenant of Seisin and the right to convey |
The grantor warrants that he or she is the legal owner of the property and has the right to convey title to it. Delivery of seisin is the actual transfer of title. |
|
|
Covenant Against Encumbrances |
The grantor warrants that the property is free from any liens or encumbrances except those of record. Encumbrances would include such items as mortgages, mechanics' liens, real estate tax liens, protective covenants, and easements. |
|
|
Covenant of Quiet Enjoyment |
The grantor guarantees that the grantee's title will be good against third parties who might bring court actions to establish superior title to the property. If the grantee's title is found to be inferior, the grantor is liable for damages. |
|
|
Covenant of Further Assurance |
The grantor promises to obtain and deliver any instrument needed to make the title good. For example, if an error in the deed is found, the grantor agrees to resign a new deed to correct the mistake. |
|
|
Covenant of Warranty Forever |
The grantor guarantees that if at any time in the future the title fails, he or she will compensate the grantee for the loss sustained. However, it is in the best interest of the grantee to obtain title insurance because at the time of a later claim, the grantor may be dead or financially insolvent. |
|
|
Special Warranty Deed (Limited Warranty Deed) |
A conveyance that carries only 2 covenants is called a special warranty deed (aka limited warranty deed). The grantor warrants that he or she received title to the land and that the property was not encumbered during the time he or she held title except as noted in the deed. Special warranty deeds generally contain the words remise, release, alienate, and convey in the granting clause. Any additional warranties to be included must be specifically stated in the deed. |
|
|
2 Warranties of Special Warranty Deed |
1. Warranty that grantor received title 2. Warranty that property was unencumbered by grantor |
|
|
Bargain and Sale Deed |
Contains no express warranties against encumbrances. However it does imply that the grantor holds title and possession of the property. The granting clause usually states a person's name or name of an entity and the words grants and releases or grants, bargains, and sells. Because the warranty is not specifically stated, the grantee has little legal recourse if title defects appear later. In some areas, this deed is used in foreclosures and tax sales. The buyer should purchase, or the seller provide, title insurance for protection. |
|
|
Bargain and Sale Deed with Covenant Against the Grantor's Acts |
A Covenant against encumbrances initiated by the grantor may be added to a standard bargain and sale deed to create a bargain and sale deed with covenant against the grantor's acts. This deed is closely equivalent to a quitclaim deed. Warranties used in general warrant deeds may be inserted in a bargain and sale deed to give the grantee similar protection. |
|
|
Quitclaim Deed (non-warranty deed) |
Provides the grantee with the least protection of any deed. It carries no covenant or warranties and conveys only such interest, if any, that the grantor may have when the deed is delivered. The grantor only remises, releases, and quitclaims an interest in the property to the grantee. The deed might convey an easement; it might re-convey equitable title back to a seller; it might convey nothing at all. |
|
|
What does a grantee acquire with a Quitclaim Deed? |
If the grantor under a quitclaim deed has no interest in the property described, the grantee acquires nothing by virtue of the quitclaim deed and does not acquire any right of warranty against the grantor. A quitclaim deed can convey title as effectively as a warranty deed if the grantor has good title when the deed is delivered, but it provides none of the guarantees of a warranty deed. |
|
|
Cloud on the Title |
A defect. A quitclaim deed is frequently used to cure this defect in the recorded history of a real estate title. Example: The name of a grantee is misspelled on a warranty deed placed in public record. A quitclaim deed with the correct spelling may be executed to the grantee to perfect the title. A quitclaim deed is sometimes used to convey ownership rights from one spouse to another during a divorce. It is also used when a grantor has allegedly inherited property, but is not certain of the validity of the title of the decedent from who the property was inherited. The use of a warranty deed in such an incidence could carry obligation of warranty while a quitclaim deed would convey only the grantor's interest. |
|
|
North Carolina Are brokers allowed to modify deeds? |
No. A licensed broker is prohibited from drafting a deed for others and is also prohibited from filling in the blanks of a deed for others. They can prepare a deed for their own property, but an attorney should be consulted for all deed preparations. |
|
|
NC Special Purpose Deeds |
Correction Deed Deed of Gift Deed of Release Trustee's Deed Timber or Mineral Deed Deeds executed pursuant to court order |
|
|
Correction Deed |
A correction deed is used when there has been an error in a previous deed. Errors in names or dates would be also corrected by this deed. Example: If the description of the property in the original deed is incorrect, you would file this. |
|
|
Deed of Gift |
This is when a grantor conveys property as a gift (that is, no consideration or only token consideration has been accepted for the property). It must be recorded within 2 years or it becomes void. Because no consideration (money, love and affection) is exchanged, there is no need to pay excise tax. |
|
|
Deed of Release |
Used to release a parcel of property from a mortgage or deed of trust lien when the real estate loan has been paid in full. |
|
|
Trustee's Deed |
A deed of conveyance executed by a trustee and it is used when a trustee named in a will, trust agreement, or trust deed conveys the real estate to anyone other than the trustor. The trustee's deed sets forth the fact that the trustee executes the instrument in accordance with the powers and authority granted to him or her by the trust instrument. - It is generally used to transfer title after a foreclosure auction. |
|
|
Timber or Mineral Deed |
Some ownership rights can be severed from the land and transferred by deed, such as harvesting of timber or minerals located on the property |
|
|
Deeds Executed Pursuant to Court Order |
This classification covers deeds such as a sheriff's deed, a tax deed, a guardian's deed, and an executor's deed. These deeds are used to convey title to property that is transferred by court order or by will. Full consideration is usually stated in the deed. This is done because it is executed pursuant to a court order; because the court has authorized the sale of the property for a given amount of consideration, this amount should be exactly stated in the document. |
|
|
Involuntary Alienation |
Title can be transferred this way without the owner's wishes or consent. Such transfers are usually carried out by operation of law and range from government condemnation of land for public use to the sale of property delinquent tax or mortgage liens. |
|
|
Involuntary Alienation Examples Figure 5.5 |
Action Process Property Taken By Person dies intestate (no heirs) -> Escheat -> State Eminent domain -> Eminent Domain ->Public or governmental agency (land needed for public use) Nonpayment of a debt secured by real property -> Foreclosure -> Creditor Adverse use of another's property for prescriptive period -> Adverse possession through suit to quiet title -> Adverse Possessor |
|
|
Intestate |
Without a will |
|
|
Escheat |
When a person dies intestate, and leaves no heirs, the title to that person's real estate passes to the state by the stat'es power of escheat. |
|
|
Eminent Domain |
The right of the government to acquire privately owned real estate for public use. |
|
|
Organizations that have power of eminent domain |
Federal, State, and Local Governments; school boards, some government agencies; and certain public and quasi-public corporations and utilities. |
|
|
Condemnation |
The process by which the government exercises the right of eminent domain , by either judicial or administrative proceedings. |
|
|
Details of Condemnation |
In the taking of property, just compensation is to be paid to the owner, and the rights of the property owner are to be protected by due process of law. Ideally, the public agency and the owner agree on compensation through direct negotiation, and the government purchases the property for a price considered fair by the owner. In some cases, the owner may simply dedicate the property to the government as a site for a school, park, etc. |
|
|
What happens when an owner's consent cannot be obtained for condemnation? |
The government agency can initiate condemnation proceedings to acquire the property. Even in the taking of the property through condemnation, the property owner must be paid just compensation. If the taken property was leases, the tenant will be entitled to compensation for damages caused by the termination of tenancy. |
|
|
Examples of eminent domain |
Generally states delegate their power of eminent domain to cities and counties or public entities for public service. - Pubic housing authority taking private owned land to build low income housing. - Clearance commission or redevelopment authority making way for urban renewal - Railway, Utility Company or State Highway Department - might acquire farmland to extend railroad tracks, bring electricity to a remote new development, or build a highway. |
|
|
Blighted |
Deteriorating, Destruction, Ruin |
|
|
Kelo v. City of New London |
In the past, the proposed use for taking property was to be for the public good. But this court decision changed the definition of public use. A development agent, on behalf of the city, brought condemnation proceeding on land owned by 9 property owners. Economic development fit within the broad definition of public use because it involved land for commercial, residential, and recreational purposes. |
|
|
Who determines rules for eminent domain to promote economic development? |
The states. Cities must follow the state rules. |
|
|
NC Eminent Domain laws |
In 2006, in response to the Kelo decision, NC clarified that "eminent domain may only be used to take a blighted parcel" - Consequently, the Kelo decision is not currently applicable in NC. |
|
|
"Quick Take" Condemnation |
Recognized in NC, when authorized by law, title possession of private property can immediately be transferred to the public authority. Furthermore, a taking of a leased property terminates any existing lease on that property. |
|
|
Lien Foreclosure |
Land can be transferred without owner's consent to satisfy debts contracted by the owner that have become liens against real property. Liens are foreclosed, the property is sold, proceeds go to pay off debts. Debts that could be foreclosed include mortgage loans, real estate taxes, mechanics' liens, and general judgments against the property owner. |
|
|
Adverse Possession |
Another means of involuntary transfer. For persons to make a claim of ownership under adverse possession they must have some reason to believe the land is theirs. Owners who do not use or inspect their land for a number of years may lose title to another person who makes a claim to the land, takes possession, and most importantly, uses the land. |
|
|
Requirements for Adverse Possession |
Open (well known to others) Continuous (uninterrupted for the required period) Exclusive (not shared with another) Adverse to the true owner's possession (the adverse possessor must intend to claim that the land occupied is his or her own) Notorious/hostile (without the permission of the owner) |
|
|
North Carolina Adverse Possession |
Required period of continuous possession is 7 years if has color of title and it is 20 years if they don't. |
|
|
Color of Title |
A faulty document that purports to give the adverse possessor title |
|
|
Action to Quiet Title |
This is a lawsuit. An adverse possessor must go to court to get clear title to the property, even if they have fulfilled all the legal requirements. It is difficult to prove title by adverse possession, and until a court decides that title has been acquired, the claimant's title is considered to be unmarketable. |
|
|
2 methods of transfer of a deceased person's property |
1. By descent (intestate succession) 2. Tranfer of title by will |
|
|
By Descent in NC (intestate succession) |
Every state, including NC, has a law known as a statute of descent and distribution. When a person dies intestate (without having a will), the decedent's real estate and personal property pass to the decedent's heirs according to this statute. |
|
|
Administrator (man) or Administratrix (woman) |
The state makes a will for anyone who does not do so. A court appoints a person to distribute the deceased's property according to the provisions of the NC Intestate Succession Act. |
|
|
Will |
Instrument made by a mentally competent owner to convey title to real and personal property on the owner's death. |
|
|
Transfer of title by will |
A will takes effect only after death; until that time, any property covered by the will can be conveyed by the owner and thus removed from the owner's estate. An ownership interest, such as joint tenancy or tenancy by entirety, that contains survivorship rights cannot be affected by a will. In NC, spouses own property as tenants by the entirety, that property cannot pass by will. Neither spouse can disinherit the other spouse by will. |
|
|
Devise |
The gift of real property by will. In NC, the term devise can be broadly used to refer to both real and personal property |
|
|
Devisee |
Personal who receives real property by will. Technically, an heir is one who takes property by the law of descent, but devisees is included in this as well. |
|
|
Legacy or Bequest |
Gift of personal property |
|
|
Beneficiary |
The person receiving personal property |
|
|
NC Intestate Succession Act |
Provides for the distribution of the property of an intestate person (one who dies without a valid will). This statute allows for the equal division of property among eligible heirs, or, in the event of no heirs, having the property escheat to the NC State Educational Assistance Authority. This statute does not override an active survivorship clause in a deed. |
|
|
Title Records |
Public records are open to the public so that anyone can review them to learn about documents, claims, other details of ownership. A prospective buyer needs to be sure of clear title and any liens or encumbrances. An attorney or title company typically searches records to ensure good title conveyed. |
|
|
Public Records |
Detailed info of each parcel in a city or county. They're crucial in establishing ownership, notice of encumbrances, priority of liens. - Protect interests of real estate owners, taxing bodies, creditors, general public. - include documents affecting title, such as deeds and mortgages - Public records regarding taxes, judgments, probate, and marriage may have important info about title to a property |
|
|
Who are public records maintained by? |
-recorders of deeds -county clerks -county treasurers -city clerks -collectors -clerks of court |
|
|
Who searches public records? |
Title companies, attorneys, lenders prospective buyers rarely search |
|
|
Recording |
Act of placing documents in public record. - rules are matter of state law - any written document that affects any estate, right, title or interest in land must be recorded in the county (town in some states) where located |
|
|
First in time, first in right, first served principle |
Recording acts also generally give legal priority to those interests recorded first. |
|
|
Various Rules or recording acts |
To be eligible for recording, a document must be drawn and executed according to the recording acts of the state where it is located. Examples in different states: Parties names below signatures Before a notary public Must be witnessed Name of who prepared document on it Rules about the size, color, quality of paper electronic recording - computers, fax machines Required certificate of real estate value and payment of current property taxes due for recording |
|
|
Giving Notice |
Anyone with an interest in a parcel can take these steps - constructive notice or actual notice Done to ensure interest is available to public |
|
|
Constructive Notice |
Legal presumption that info can be obtained through due diligence. Properly recording documents gives constructive notice to world of a person's rights or interests, and physical possession - Prospective purchaser responsible for discovering interest |
|
|
Actual Notice |
Info is available and has been given to someone. Actually knows it If proved that a person has actual notice, they cannot use a lack of constructive notice (such as unrecorded deed) to justify a claim. |
|
|
Direct Knowledge |
A person has this if they have searched public records and inspected property. |
|
|
Priority |
refers to the order of when documents or liens were recorded. Who recorded first? Which party was in possession first? Who had actual or constructive notice? |
|
|
Example of Priority |
Seller B sells property to Buyer A and gives deed. Buyer A did not record Seller B sells same property to Buyer C with deed.y Buyer C promptly records it. Buyer A may have superior claim, but in NC Buyer C may have superior claim (Connor Act) |
|
|
Unrecorded Documents |
Real Estate Taxes and Special Assessments are liens on specific parcels and are recorded after taxes or assessments are past due. Inheritance taxes and franchise taxes are statutory liens placed against all real estate owned by a decedent at time of death or corporation at time franchise taxes become a lien and are not recorded. Evidence of payment should be gathered off record - paid tax receipts, letters from municipalities, etc. |
|
|
Chain of Title |
Record of property's ownership beginning with first - present. Does not include encumbrances or other documents unrelated to ownership. |
|
|
Suit or Quiet Title |
Court action to establish ownership in the case of a broken chain, gap or cloud on the title. Court's judgment can be filed after all claimants are allowed to present evidence. Example: Grantor acquired title under one name and conveyed it under another. Forged Deed - no grantees had legal title after this Title acquired by adverse possession |
|
|
Marketable Title |
Seller is required to deliver to buyer at closing. Must meet 5 criteria below: 1. Free of significant liens, encumbrances 2. no serious defects 3. Free of doubtful questions of law or fact to prove it's validity 4. Protect purchaser from litigation or threat to quiet enjoyment 5. convince that can be sold or mortgaged at fair market value |
|
|
Title Search and Property Survey |
A buyer should insist these are done to make sure it is marketable title. Warranty deed is not enough. |
|
|
Title Search |
- This is an examination of all public records that might affect the title - Title examiner tries to establish chain of title - In U.S chains in colonial states date back to grant from king of England - States admitted to Union after formation of U.S. deeds of conveyance generally stem from patent issued by U.S. government - Lawyer, paralegal, title company may perform title search - Only attorneys can give opinion of title (NOT BROKERS) |
|
|
Abstract of Title |
Through the chain of title, ownership is traced back from present owner to source - a condensed history |
|
|
How far back are title searches? |
- Usually 30 to 60 years, most defects are revealed. - shorter period of time for practical purposes or local custom - ownership traced by searching grantees and grantors, not the property itself - indices are held in Register of Deeds' |
|
|
Grantor and Grantee Index System |
- Used in NC to examine title - When title exam is conducted, the examiner lists each in chronological order with info on taxes, judgments, special assessments, surveys, easements, etc. |
|
|
Marketable Title Act |
In NC - if chain of title can be traced 30 years, it is marketable title. Before that, claims may be extinguished because they are obsolete. |
|
|
Title Insurance |
- Policy by title insurance company to indemify (compensate or reimburse) in the case of defects of title - For Owner's policy typically insures purchase price permanently - For Lender limited to loan amount and is of diminishing liability |
|
|
Coverage of Standard Policy - Title Insurance |
Any defects in public records plus many not found there |
|
|
American Land Title Association (ALTA) |
Includes all of standard plus extended (only revealed through survey, even owner's rights). Does not include defects in or liens against title that are found by title examination and listed in standard policy |
|
|
ALTA Protections against title defects not in public records |
-falsification of records - misrepresentation of true owner - old unsettled estates - forged deeds, releases, wills - instruments executed under fabricated or expired power of attorney - errors in copying and indexing - deeds delivered after death of grantor or grantee or without consent of grantor - mistakes in recording legal documents - undisclosed or missing heirs - birth or adoption of children after the date of the will - deeds by persons of unsound mind - deeds b persons supposedly single but secretly married - deeds by minors |
|
|
Details of Title Insurance Policy |
The consideration for the policy (premium) is paid once at closing for life of policy. - Maximum loss for which company may be liable cannot exceed the face amount of policy (unless the amount of coverage has been extended by use of an inflation rider) - When title company settles a claim covered by policy, it can then step in insured party's shoes and seek compensation from anyone responsible for the settled claim. |
|
|
What does an owner get if they were to lose title because of a covered claim? |
If they have a title insurance policy, title company would pay the owner the value of property up to face amount of policy (plus the amount covered in the policy's available inflation clause). Title company also assumes any costs incurred in the defense of the title. |
|
|
Title Insurance (Standard Coverage) |
Defects found in public records Forged documents incompetent grantors incorrect marital satements improperly delivered deeds |
|
|
Title Insurance (Extended Coverage) |
Standard coverage plus defects discoverable through: - property inspection, including unrecorded rights of persons in possession - examination of survey - unrecorded liens not known by policyholder |
|
|
Not covered by title insurance (either policy) |
- Defects and liens listed in policy - Defects known to buyer - changes in land use brought about by zoning ordinances - Defects that would have been shown by an accurate survey, if a survey was not done |
|
|
What does it mean that NC is an approved attorney state? |
Title searches usually performed by an attorney rather than title insurance company - attorney submits a prelim opinion on title to the title insurance company - company then issues a title commitment |
|
|
Title Commitment |
- Issued by insurance company after receiving attorney's opinion on title. - includes description of title insurance policy - includes name of insured party - and legal description of real estate; the estate of interest covered; a schedule of all exceptions, consisting of encumbrances and defects found in the public records and conditions and stipulations under which the commitment is issued. It is used at closing as assurance of a clear title to the property in question |
|
|
Offer to Purchase and Contract |
Refer to page 104 "in practice" |
|
|
Opinion of Attorney |
Attorney issues final opinion on title after closing and this goes to the tile insurance company, who issues the title based on this info. The insurance company defends the title as insured. Coverage begins after closing. Will pay for any claims if title is defective. Opinion of attorney is not a guarantee, but an opinion. |
|
|
Lender's pre-qualifying steps |
- Lenders typically order a title search to make sure there are no liens superior to the mortgage. - Typically require borrower to purchase a title insurance policy to protect their interest. - Owner's policy is recommended, but is not automatic so the owner must request and purchase it. |
|
|
Title Recordation |
Conveyances and interests in real property must be recorded to be enforceable. All owners interested in real estate need to record all documents affecting their interest in real estate. |
|
|
Constructive Notice |
Public notice, or legal notice, to the world of interests in real estate. |
|
|
Actual Notice |
Physically taking possession of property |
|
|
Necessity for recording |
Through the recording process, documents affecting ownership are public record. A potential buyer can inspect them and verify the seller can convey good title as well as liens and encumbrances. Example - Buyer paying cash can be sure all debts are paid. |
|
|
Register of Deeds - North Carolina |
Any estate, right, title, or interest in land should be recorded here in the county where it is located |
|
|
Lien Satisfactions |
Such as mortgage payoff, need to be recorded to clear encumbrance from title. Anyone interested in the title to the property can do a title search of recorded interests to see interests of all other parties. NC is pure race state. |
|
|
NC Connor Act |
State law that says many types of real estate documents are not valid as to third parties unless recorded. Includes deeds, mortgages, installment land contracts, assignments, options, lease of more than 3 years, easements, restrictive covenants. |
|
|
Pure Race Statute |
Under the Connor Act, if a purchaser fails to record a deed but a subsequent purchaser does, the subsequent purchaser's title takes precedence. Whoever records first prevails, even if they had personal knowledge that previous interest was unrecorded. Example - Zackerman sells property to Sands who doesn't record it, then sells to Hanson who records it and suspects that Zackerman no longer owns it. Hanson is owner. Sands is not owner, but may be able to sue Zackerman. |
|
|
Torrens System of Land Registration |
Legal registration system used to verify ownership and encumbrances similar to registration of ship titles. This system provides evidence of title without the need for an additional search of public records. The registering government basically guarantees that the named person is the owner of the registered title. Under this system, an owner of real property submits a written application to register the title. The applications is submitted to the court clerk of the county. If applicant proves ownership, the court enters an order to register the real estate. The registrar of title is directed to issue a certificate of title. It reveals the owner of the land and all mortgages, judgments, and similar liens, but not federal or state taxes and some other items. Relies on physical title itself. Every owner is free from adverse claims, rights, or encumbrances not noted in the certificate of title. No title, right, or interest contrary can be acquired by prescription or adverse possession. It is rarely used in NC |
|
|
NC Excise Tax |
All sellers in NC must pay this based on sales price of property There is levied an excise tax on each deed, instrument, or writing by which any interest in real property is conveyed to another person. The amount is $1 for every $500 of consideration or fraction thereof and always is expressed in a whole dollar amount. Type of financing used, if any, has no effect on calculation of this tax. |
|
|
Revenue Stamps |
Prior to year 2000, revenue stamps were affixed to each deed as proof excise tax was paid. Now, because Registrar of Deeds must mark the document to show the tax amount paid prior to recording th document, the term "revenue stamps" has been discontinued. |
|
|
Exemptions from payment of excise tax |
Transfer by a government entity Transfer by will or intestate succession because of death Transfer by deed or gift when no consideration is paid Transfer by merger or consolidation Transfer by lease for a term of years Transfer by instruments securing a debt, such as a mortgage and/or deed of trust |
|
|
Deed Transfer Taxes |
A number of NC counties have additional taxes on real estate sales often referred to as this. |
|
|
Calculate NC excise tax |
If sales price is not an even $500, round up to nearest $500, divide by 500, then multiply by $1 Example: Sale Price: $89,250 = $89,500/500 = 179 x $1 = $179 |
