Title Records Chapter 13 D. Zaharopoulos. Title: bundle of rights recognized & protected by law Deed: document used in the transfer of ownership in.

Title RecordsTitle Records

Chapter 13Chapter 13

D. ZaharopoulosD. Zaharopoulos

Title: bundle of rights recognized & Title: bundle of rights recognized & protected by lawprotected by law

Deed: document used in the transfer Deed: document used in the transfer of ownership in real estateof ownership in real estate

Recording a DeedRecording a Deed

Affidavit of ValueAffidavit of Value (or affirmation of value)(or affirmation of value) issued attesting to the purchase price & issued attesting to the purchase price & signatures (notarized)signatures (notarized)

Sent to County Assessors office for tax Sent to County Assessors office for tax purposespurposes

Must be recorded in county where the Must be recorded in county where the real estate is locatedreal estate is located

Recordation, while not mandatory, gives the public legal & constructive notice of written documents that affect real estate

AZAZ

Seller usually pays to record the Seller usually pays to record the DeedDeed

Recorded by the Title CompanyRecorded by the Title Company $3.00$3.00 Confirms property value at time of Confirms property value at time of

salesale

NoticeNotice

Constructive Notice-Constructive Notice- legal presumption that legal presumption that information is available by diligent inquiryinformation is available by diligent inquiry

Actual NoticeActual Notice – direct, actual or personal – direct, actual or personal knowledge; knowing what has been recorded knowledge; knowing what has been recorded and personal inspection of propertyand personal inspection of property

Inquiry NoticeInquiry Notice –”caveat emptor”; law –”caveat emptor”; law presumes a reasonable person would make presumes a reasonable person would make further inquiry into a propertyfurther inquiry into a property

Priority of Recorded DocumentsPriority of Recorded Documents

By date & time of recordationBy date & time of recordation Subject to priority of unrecorded Subject to priority of unrecorded

documents:documents:• Direct liens (taxes & special assessments)Direct liens (taxes & special assessments)• Statutory liens (estate tax liens, bail bond Statutory liens (estate tax liens, bail bond

liens, inheritance tax liens, etc)liens, inheritance tax liens, etc)

Chain of TitleChain of Title

Recorded history of all matters affecting title.Recorded history of all matters affecting title.Includes ownership.Includes ownership.

Patent Deed-Patent Deed- first deed in a chain of title first deed in a chain of title

Gap in the chainGap in the chain requires a requires a suit to quiet suit to quiet titletitle or or quit claim deedsquit claim deeds. If not resolved, . If not resolved, brought to court.brought to court.

Title SearchTitle Search

Examination of public records to Examination of public records to determine any defects in chain of determine any defects in chain of title.title.

Usually goes back 40-60 yearsUsually goes back 40-60 years

Abstract of titleAbstract of title is a summary report is a summary report of items of items onlyonly in public records. in public records.

Marketable TitleMarketable Title

No serious defects, does not expose No serious defects, does not expose purchaser to litigation, convinces purchaser to litigation, convinces purchaser that they can sell or purchaser that they can sell or mortgage the property.mortgage the property. (Typical sales contract requires marketable title)(Typical sales contract requires marketable title)

Unmarketable titleUnmarketable title can still be can still be transferred, but defects may limit its transferred, but defects may limit its ownership.ownership.

Proof of OwnershipProof of Ownership

•Deed by itself is not sufficientDeed by itself is not sufficient

•Must have evidence of titleMust have evidence of title

Evidence of TitleEvidence of Title

Certificate of titleCertificate of title Abstract & attorney’s opinion (no Abstract & attorney’s opinion (no

deed)deed) Title InsuranceTitle Insurance Torrens SystemTorrens System

Certificate of TitleCertificate of Title

Based on title searchBased on title search Prepared by title co., licensed Prepared by title co., licensed

abstracter, or attorneyabstracter, or attorney

Unrecorded liens, rights of parties in Unrecorded liens, rights of parties in possession and hidden defects cannot be possession and hidden defects cannot be

detected.detected.

Abstract & Attorney’s OpinionAbstract & Attorney’s Opinion

Uncovers matters of ownership onlyUncovers matters of ownership only Attorney’s opinion is based on Attorney’s opinion is based on

abstractabstract

Abstract lists only items found in public Abstract lists only items found in public records.records.

Title InsuranceTitle Insurance

Protects mortgagors & mortgagees Protects mortgagors & mortgagees against loss through defects in title, against loss through defects in title, liens, or encumbrances.liens, or encumbrances.

The strongest proof of ownershipThe strongest proof of ownership

Title InsuranceTitle Insurance

Title Examiner-Title Examiner- prepares prepares preliminary title reportpreliminary title report (“(“commitment to issue policycommitment to issue policy”)”)

Title Plant-Title Plant- headquarters of title headquarters of title company with copies of constructive company with copies of constructive notice (legal documents)notice (legal documents)

Commitment for Title InsuranceCommitment for Title Insurance

Schedule A:Schedule A: Sales priceSales price Loan amount (if any)Loan amount (if any) Name of proposed buyerName of proposed buyer Name of existing sellerName of existing seller Legal descriptionLegal description

Schedule B:Schedule B: Lists items excluded from coverageLists items excluded from coverage

2 Title Insurance Policies 2 Title Insurance Policies

PAID ONCE AT CLOSINGPAID ONCE AT CLOSINGOwner’s policyOwner’s policy (Protection of buyer) (Protection of buyer) Paid for by seller, because it reduces seller’s Paid for by seller, because it reduces seller’s

liability in case of defects & covers forgeriesliability in case of defects & covers forgeries Issued at Purchase priceIssued at Purchase price Good as long as buyer or heirs have propertyGood as long as buyer or heirs have property

Lender’s PolicyLender’s Policy (Protection for mortgagee) (Protection for mortgagee) (ALTA-American Land Title Association)(ALTA-American Land Title Association) Paid for by the borrowerPaid for by the borrower Issued on the Loan amountIssued on the Loan amount Good as long as loan is outstandingGood as long as loan is outstanding

Owner’s PolicyOwner’s Policy

Standard coverageStandard coverage Defects in public recordsDefects in public records Forged documentsForged documents Incompetent grantorsIncompetent grantors Incorrect marital statementsIncorrect marital statements Improperly delivered deedsImproperly delivered deeds Claims from unknown heirsClaims from unknown heirs fraudfraud

Owner’s PolicyOwner’s Policy

Extended coverageExtended coverage Covers everything in standard policy Covers everything in standard policy plusplus Property inspection & unrecorded rights of Property inspection & unrecorded rights of

persons in possessionpersons in possession Examination of surveyExamination of survey

(physical inspection for encroachments, water/sewer (physical inspection for encroachments, water/sewer lines, additions to house, etc.)lines, additions to house, etc.)

Unrecorded liens not known to policyholderUnrecorded liens not known to policyholder (ie-mechanics liens, any lis pendens)(ie-mechanics liens, any lis pendens)

Owner’s Policy ExclusionsOwner’s Policy Exclusions

Defects & liens listed in the policyDefects & liens listed in the policy Defects know to buyerDefects know to buyer Changes in land use Changes in land use (ie-zoning)(ie-zoning)

Lender’s PolicyLender’s PolicyInsures against:Insures against:

Items in public records Items in public records (like owner’s policy)(like owner’s policy)

Rights of parties in possession Rights of parties in possession (not in std owner’s policy)(not in std owner’s policy)

Unrecorded documents & interests Unrecorded documents & interests (not in std owner’s policy)(not in std owner’s policy)

Questions of survey & encroachment, Questions of survey & encroachment,

physical inspection physical inspection (not in std owner’s policy)(not in std owner’s policy)

SubrogationSubrogation

When a title company makes When a title company makes payment to settle a claim, it acquires payment to settle a claim, it acquires rights to any remedy or damages rights to any remedy or damages available to the insured.available to the insured.

Torrens SystemTorrens System

Written application to register the title Written application to register the title with clerk of county court.with clerk of county court.

Torrens registration is the title.Torrens registration is the title.

AZAZ does does notnot use the Torrens system, nor do use the Torrens system, nor do other places where Title Insurance is other places where Title Insurance is

prevalent.prevalent.

Pledging Personal PropertyPledging Personal Property

When personal property is used as collateral for a When personal property is used as collateral for a

loan, you need:loan, you need:

Security agreementSecurity agreement – complete item description – complete item description

to which lien appliesto which lien applies

Financing statement (UCC-1)-Financing statement (UCC-1)-short form that is short form that is

filed at secretary of state in order to be legalfiled at secretary of state in order to be legal