Title Lore (SAFE EXAM)

Title

A legal document that establishes ownership of property. Shows who owns the properties and if there are any claims or restrictions on it.

Chain of Title

Historical Record of ownership for a property, also shows how the title has been passed from owner to owner over time.

What is essential for the property to be sold or transferred without legal disputes

Clear chain of title

If there is an issue in the chain of title, such as gaps or discrepancies what must happen?

The issues must be resolved before closing.

Title insurance

a type of insurance that protects against financial loss and legal expenses if there are defects in a property's title. It protects against losses that occur before the policy's issue date

Title insurance is paid…

as a one time fee at closing

Title insurance covers…

past issues with the title, not future problems

Lender’s title insurance is…

Required

Lender’s title insruance

protects against financial losses that can occur when a property's title has defects

Owner’s title insurance is…

optional

Owner’s title insurance

protects a homeowner's investment in their property by safeguarding against title defects and legal issues that may arise before or after the purchase of a property

Title search

detailed examination of public records to verify the chain of title and identify any issues (e.g., liens, encumbrances, legal claims).

Who conducts a title search?

A title company or an attorney before closing to ensure the property can be closed with a clear title

Warranty deed

A legal document where the seller guarantees the buyer that they have a clear title to the property, and defend against any claims to the property’s ownership.

Abstract of Title

A summary of all public records, documents, and legal proceedings related to the ownership history of a property.

Title commitment

Preliminary document detailing conditions for title insurance issuance.

Marketable Title

A title that is free from significant defects, liens, or encumbrances, making it acceptable for sale or mortgage.

Cloud on Title

Any claim, lien, or encumbrance that casts doubt on the ownership of a property.

Lien

A lien gives a creditor or lender a legal right to take possession of a property if the borrower fails to repay a debt.

Voluntary Lien

Created with borrower’s consent, IE Mortgages

Involuntary Lien

Imposed without the borrower’s consent, often as a result of unpaid obligations (e.g., tax liens).

Encumbrance

A claim or restriction that affects property use or value.

Easement

A right granted to another party to use a portion of the property for a specific purpose (e.g., utility access).

Quitclaim Deeds

A deed that transfers ownership rights but provides no guarantee of title quality. Often used between family members or for clearing title defects.

difference between warranty deed and quitclaim deed?

Warranty deed guarantees title quality

Quitclaim deed does not guarantee title quality