Lesson 3: Evidence of Ownership - Title

Question 1

Chain of title

Answer 1

The recorded history such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title.

Question 2

Clear title
Established title
Title without clouds

Answer 2

Title to property that is free from liens, defects or other encumbrances, except those that the buyer has agreed to accept, such as mortgage to be assume, the ground lease of record and the like.

Question 3

Cloud on title

Answer 3

Any document, claim, unreleased lien or encumbrance that may impair or injure the title to property or make the title doubtful because of its apparent or possible validity

Question 4

Constructive notice

Answer 4

Notice of certain facts that is implied by law to a person because he or she could have discovered the fact by reasonable diligence or by inquiry into public records

Question 5

Escrow

Answer 5

The process by which money and/or documents are held by a disinterested third person ( a “stakeholder”) until the satisfaction of the terms and conditions of the escrow instructions

Question 6

A stakeholder

Answer 6

A disinterested third person in an escrow process

Question 7

Marketable title

Merchantable title

Answer 7

Good or clear title reasonably free from risk of litigation over possible defects; also referred to as merchantable title. Marketable title need not, however, be perfect title

Question 8

Litigation

Answer 8

The process of taking legal action

Question 9

Quiet title action

Answer 9

A circuit court action intended to establish or settle the title to a particular property, especially where there is a cloud in the title

Question 10

Recording

Answer 10

The act of entering into a book of public records the written instructions affecting the title to
real property, such as deeds, mortgages, contracts of sale, options, assignments and the like.
Proper recordation imparts (communicates) constructive notice to all the world of the existence of the recorded document and its contents.

Question 11

Settlement

Answer 11

The act of adjusting and prorating the various credits, charges and settlement costs to conclude a real estate transaction.
Pretty much, determining who gets and gives (pays) what.

Question 12

Title insurance

Answer 12

A comprehensive contract of indemnity (protection) under which the title company agrees to reimburse the insured for any loss if title is not as represented in the policy.

Question 13

Title search

Answer 13

An examination of the public records to determine what, if any, defects their are in the chain of title.

Question 14

Where are the public records kept?

Answer 14

In Colorado by law it is the office of the county clerk and recorder of the county where the real property is located

Question 15

Notice

Answer 15

Any person who knows a fact, should know the fact, or has been provided with notification of the fact has notice.

Question 16

Who and why provides the notice?

Answer 16

Public recording, then, announces or provides notice when an interest in land is created, transferred, encumbered, or otherwise affected.

Question 17

Constructive Notice

Legal notice

Answer 17

Constructive notice (also called legal notice) is knowledge 
that can be obtained through public records.

Question 17

Actual notice

Answer 17

Actual notice is information obtained by what someone has seen, heard, or read.

Question 18

Inquiry Notice

Answer 18

Inquiry notice is legal notice requiring one to look into

appearances or rumors that would generate suspicion.

Question 19

There are three generally recognized recording acts: … ?

Answer 19

notice, race-notice, and race

Question 20

Who prevails in Notice Jurisdictions?

Answer 20

In a notice jurisdiction, if a first party to acquire
interest has not recorded at the time a second party
acquires interest, the second party’s interest will
prevail.

Question 21

In Colorado is a deed is valid even if not recorded?

Answer 21

Yes

Question 22

Even if a deed is not acknowledged does it still provides constructive
and legal notice?

Answer 22

Yes

Question 23

What is an acknowledgement?

Answer 23

An acknowledgment is a formal declaration made before a
notary public or other official authorized to take
acknowledgments, by a person signing a document that he/she
did in fact sign the document and that the signing was a
free and voluntary act.

Question 24

For how long and unacknowledged document has to be recorded in order to be accepted s an evidence in court?

Answer 24

An acknowledged document, or an unacknowledged one that has been recorded for at least ten years, may be used as evidence in a controversy.

Question 25

Prima facie evidence

Answer 25

Prima facie evidence is that which is good enough by itself to establish a fact.

Question 26

For how long an instrument has to be recorded in order to be considered a prima facie?

Answer 26

If an instrument has been recorded for 20 years, the facts of the deed may serve as prima facie evidence of the facts.

Question 27

Does unmarketable title prevent property from being transfered?

Answer 27

Unmarketable title does not mean that a property cannot be transferred; it does, however, mean that there are defects in the title that may affect ownership.

Question 28

Gap

Answer 28

If there is a broken link in the chain of title, there is said to be a gap in the chain.

Question 29

What does gap do with a title?

Answer 29

Gap clouds a title.

Question 30

Abstract

Answer 30

A summary of all recorded documents relating to the title of a property is an abstract.

Question 31

Patent

Answer 31

The instrument that conveyed the property from the government to an individual is the patent.

Question 32

Certificate of title

Answer 32

Abstract plus attorney's opinion about the property based on the abstract.

Question 33

Title insurance policies are usually made up of three sections:

Answer 33

1. the agreement to insure the title and indemnify against loss, 2. a description of the estate and property being insured, and 3. a list of conditions of and exclusions to coverage.

Question 34

There are two types of title insurance:

Answer 34

The owner's policy | The lender's or mortgagee's policy.

Question 35

What is a commitment to insure?

Answer 35

Since the insured party will not own the property until after the closing, but is required by the lender and by good judgment to have title insurance as of closing, a commitment to insure is issued sometime before closing.

Question 36

When is the title insurance issued?

Answer 36

The title insurance policy itself is issued shortly after closing.

Question 37

How much is the cost of the title insurance in Colorado?

Answer 37

In Colorado, as a rule of thumb, the cost is about nine-tenths of one percent of the sales price.

Question 38

subrogation

Answer 38

The substitution of one person or group by another in respect of a debt or insurance claim, accompanied by the transfer of any associated rights and duties.

Question 39

Who provides and pays for evidence of title differs from state to state?

Answer 39

In Colorado, the contract approved by the Real Estate Commission for agent use, the RESIDENTIAL CONTRACT TO BUY AND SELL REAL ESTATE, states that the Seller pays.

Question 40

Who Obtains and Delivers The Title Commitment?

Answer 40

The listing broker, on behalf of the seller, obtains the commitment.

Question 41

When to Use Escrow Closing in Colorado?

Answer 41

When distrust exists between the parties and bringing them together would be unwise or when a buyer or seller will be out of town and cannot attend a closing.

Question 42

Where is Torrens Title Certificate used in Colorado?

Answer 42

Only in Eastern Colorado.