Real Estate: Title & Ownership

• Title signifies ownership, distinct from the physical document, with evidence recorded on deeds.
• Deeds are instruments used to convey title, managed by title companies in accordance with state laws.
  • The grantor (seller) conveys title to the buyer.
  • The grantee (buyer) receives title through the deed.
  • Closing attorneys ensure recordation at the county courthouse in the property's jurisdiction.
• Escrow/Title Officer is a neutral third party ensuring agreement terms are met before title transfer, by holding funds, depositing money, and preparing documents for closing.
• Abstract of Title is a raw research certificate detailing a property's chronological history, including grants, transfers, rights, and liabilities.
  • An Attorney's Opinion of Title confirms the abstract's accuracy, offering the buyer minimal protection.
• Chain of Title is a report of all owners via recorded deeds, with lenders seeking a 24-month consecutive chain, and any red flags.
  • A seller's absence can halt a sale.
  • Numerous transfers in a short period may indicate fraudulent activity.
• Defect/Cloud on Title refers to encumbrances that must be resolved before a buyer assumes title.
  • Clearing these involves a Quiet Claim Deed, Quiet Title Action (if the owner is deceased), or recorded affidavit.
  • Errors in the Chain cannot be fixed.
• Marketable Title is a seller's promise of a clear title that allows for resale at full market value.
• Alienation is the transfer of property title from one person to another, voluntarily (sale) or involuntarily (eminent domain foreclosure).
• Quiet Title Action is a lawsuit to establish real property ownership.

Title Insurance

• Title Insurance offers a limited guarantee of marketable title, protecting buyers from later-discovered problems.
  • It does not cover zoning restrictions, undisclosed defects, or policy exceptions.
  • Policies are not required for cash transactions without lenders.
• PR Preliminary Report / Commitment for Title Insurance, provided by the seller, is a contract to issue a title insurance policy post-closing, pending requirement fulfillment.
  • The insurance company researches county records, property defects, court judgments, liens, and the property's condition.
  • Schedule A details transaction specifics (dates, parties, property details).
  • Schedule B1 outlines requirements for title insurance.
  • Schedule B2 lists exclusions from coverage.
• General concerns the gap between commitment and recording.
• Standard affects every property.
• Special refers to property tax exceptions.

Types of Policies

• Owner's Policy: purchased by the seller, protects the buyer, and insures the property with its bundle of rights.

  • It covers defects, forged documents, and improperly delivered deeds.
  • ALTA (American Land Title Association) sets standards for insurance products.
  • ALTA Homeowners Policy is residential coverage, not for raw land.
  • ALTA Extended Coverage Owners Policy suits commercial properties, with more coverage but higher costs.

• Lender's Policy: purchased by the buyer, protects the lender, and enables foreclosure for the full loan amount.

  • Covers Standard Coverage items, unrecorded rights of possessors, and unknown liens.
  • Coverage amount matches the mortgage, not the property value.
  • Subrogation allows the insurer to recover funds from the at-fault party.

• Actual notice refers to written notification.

• Constructive notice involves information obtained otherwise.