Selling Real Property- Part II (Ch. 8)

Question 1

Three methods of title asurance

Answer 1

Title covenants (promise by seller that title is good), title opinion based on search of public record by attorney/other professional, title insurance (purchased by buyer)

Question 2

doctrine of merger

Answer 2

at common law, provided that once the grantee accepted the deed all prior promises were extinguished (e.g. the contract was “merged” into the deed).

Question 3

general warranty deed

Answer 3

grantor warrants title against all defects, whether they arose before or after he obtained title.

Question 4

special warranty deed

Answer 4

grantor warrants title against all defects that arose after he obtained title.

Question 5

quitclaim deed

Answer 5

makes no warranties about title, so the grantee received only what the grantor has, if anything.

Question 6

covenant of seisin

Answer 6

a promise that the grantor owns the estate he purports to convey

Question 7

covenant of right to convey

Answer 7

a promise that the grantor has the right to convey title. Ex. the covenant is breached if the grantor is a trustee who lacks the authority to transfer title to the trust property.

Question 8

covenant against encumbrances

Answer 8

a promise that there are no encumbrances on the title other than those expressly listed

Question 9

covenant of warranty

Answer 9

a promise that the grantor will defent the grantee against any claim of superior title.

Question 10

covenant of quiet enjoyment

Answer 10

a promise that the grantee’s possession of the property will not be disturned by anyone holding superior title.

Question 11

covenant of further assurances

Answer 11

a promise that grantor will take all future steps reasonably necesssary to cure title defects that existed at the closing.

Question 12

What are the three present covenants?

Answer 12

seisin, right to convey, and against encumbrances.

Question 13

What are the three future covenants?

Answer 13

warranty, quiet enjoyment, and further assurances.

Question 14

When are present covenants breached?

Answer 14

If at all, at the moment the deed is delivered.

Question 15

When are future covenants breached?

Answer 15

If at all, after the closing.

Question 16

Two systems used in recording offices

Answer 16

Grantor-Grantee Index or Tract Index

Question 17

Grantor Grantee Index

Answer 17

Each recorded document is indexed by last name under the grantor and the grantee’s last name. To search title, establish a chain back to when the government owned the land, then go forwardlooking up each grantor untinl you arrive back to the present interest.

Question 18

Tract Index

Answer 18

Every document that affects a certain parcel of land is filed under that parcel ID in the same file, so to search title you simply look at all documents in the file for that parcel of land.

Question 19

constructive notice

Answer 19

you are assumed to know what you would have learned if you had checked the record carefully.

Question 20

inquiry notice

Answer 20

discovered by asking landholder or other paties involved.

Question 21

Mother Hubbard instrument

Answer 21

A deed or other instrument in writing which is intended to convey an interest in real estate and which describes the property to be conveyed as all of the grantor’s property in a certain county.

Question 22

Race jurisdiction

Answer 22

the purchaser who records first has priority. (only still used in 2 states)

Question 23

Notice jurisdiction

Answer 23

the subsequent bona fide purchaser has priority.

Question 24

Race-notice jurisdiction

Answer 24

the subsequent bona fide purchaser who records first has priority.

Question 25

Messersmith v. Smith (1953)

Answer 25

Caroline conveys to Frederick, Caroline then conveys to Smith, and finally Smith conveys to Seale. Smith records first (but the recording isn't valid b/c wasn't before a notary), then Seale records, then Frederick records (in a race-notice jx.) Court holds that Frederick wins title because although Seale recorded first he wasn't a BFPV b/c the prior recording wasn't valid.

Question 26

Zimmer Rule

Answer 26

To "win the race" all deeds in your chain of title must be recorded (this is why Seale lost in the Messersmith case).

Question 27

shelter rule

Answer 27

A BFPV is allowed to transfer his protection to a later grantee, and that grantee is protected even if he knows about conflicting claims to the land.

Question 28

Two major defects of Recording Systems

Answer 28

(1) they do not conclusively establish title, and (2) even purchasers who carefully search the records may lose title due to unrecorded interests which are outside the scope of the recording acts.

Question 29

Title registration

Answer 29

alternative to the recording systems; government assumes the rule of title assurer by maintaining an authoritative registry of title.

Question 30

Torrens System

Answer 30

alternative system to recording acts, whereby title to land is passed only by registering transfer with a government agency. Although it is more efficient than the recording system, it lost favor in the U.S. b/c it required an initial judicial determination of title to ALL land parcels, and exceptions undermined its effectiveness.

Question 31

Wild deed

Answer 31

S conveys to B, who does not record, B conveys to C, C records, S conveys to D, D records. The B-C deed is "wild" b/c it will not be found by D since B never recorded. D owns the property.

Question 32

Deed recorded too late

Answer 32

S conveys to B, who does not record, S conveys to C (who knows of B), C records, B records, C conveys to D, D records. D will not discover B's interest b/c the S-B deed was recorded when D is no longer searching under S's name. D owns the property.

Question 33

Deed recorded too early

Answer 33

S owns Greenacre, B conveys to C, D records, S conveys to B, B records, B conveys to D, D records. D will not discover C's interest b/c the B-C deed was recorded when D isn't looking under B's name. D owns the property.

Question 34

Deed from a common grantor

Answer 34

This occurs when the initial grantor owned two parcels and reserved, for example, an easement across one of them when transfering the first parcel, and then the grantee of the second parcel has no notice of the easment b/c she will only look at conveyances related to her own parcel.

Question 35

difference between fraud and forgery for purposes of the Recording Act?

Answer 35

A deed obtained through forgery is void, while a deed obtained through fraud is voidable.

Question 36

Raub v. General Income Sponsors of Iowa (1970)

Answer 36

Raub was the victim of fraud over the deed to her property, and the issue was whether the bank that mortaged the house to the fraudster had notice that such title was obtained by fraud. The court held that it did not, because there was no evidence to charge them with such notice. Raub should have taken action to void the conveyance, but she did not do so until after the banks had obtained the mortgages.