Class 4: Overview of Marketable Title and Title Insurance - Jan. 22

Question 1

What is the implied term of marketable title? (Emanuel)

Answer 1

Marketable title is both an implied condition and an implied promise. (79–80)

Question 2

What is the definition of marketable title? (Emanuel)

Answer 2

Marketable title is title that is (1) good in fact, (2) subject to no encumbrances except those agreed to by the parties, and (3) free from reasonable doubt.

Question 3

What must a valid title objection do? (Emanuel)

Answer 3

A valid title objection must identify a defect in seller’s title rather than some other problem.

Question 4

When must the seller’s title be marketable? (Emanuel

Answer 4

Seller’s title must be marketable at closing.

Question 5

When is the buyer allowed to object to the seller’s title? (Emanuel)

Answer 5

The buyer must object and give seller a reasonable period of time to cure title.

Question 6

Does a buyer’s knowledge of a title defect preclude the buyer from objecting to the defect? (Emanuel)

Answer 6

No. The buyer’s knowledge of a title defect usually does not preclude buyer from objecting to the defect.

Question 7

What happened in Van Vliet & Place, Inc. v. Gaines (1928)? (Q/TB)

Answer 7

A covenant on land that limits permissible activities on the land and reverts the ownership to prior owners upon violation of the covenant renders the land’s title unmarketable. If there’s some kind of reversion or reverter on the deed the title is unmarketable.

Question 8

What happened in McMaster v. Strickland (1991)? (Q/TB)

Answer 8

Buyer was mistaken about ability to obtain permits to fill wetlands. Contract contained no relevant conditions. No mistake because error unilateral assumption permits could be obtained. A known or disclosed zoning constraint does not make title unmarketable.

Question 9

What are the two primary functions of title insurance? (Emanuel)

Answer 9

Search and disclosure and risk spreading.

Question 10

What does search and disclosure mean? (Emanuel)

Answer 10

The title searches the records and discloses its findings.

Question 11

What does risk spreading mean? (Emanuel)

Answer 11

The title policy insures undisclosed risks. This is risk spreading among the pool of insured policyholders.

Question 12

What are covered risks for title insurance?

Answer 12

A risk of litigation that has not been manifest.

Question 13

What are the general exceptions to covered risks?

Answer 13

Known easements, property taxes, pretty much anything a diligent title search would uncover.