Title Records Chapter 13 D. Zaharopoulos

 Title: bundle of rights recognized & protected by law  Deed: document used in the transfer of ownership in real estate

Recording a Deed  Affidavit of Value (or affirmation of value) issued attesting to the purchase price & signatures (notarized)  Sent to County Assessors office for tax purposes  Must be recorded in county where the real estate is located Recordation, while not mandatory, gives the public legal & constructive notice of written documents that affect real estate

AZ  Seller usually pays to record the Deed  Recorded by the Title Company  $3.00  Confirms property value at time of sale

Notice  Constructive Notice- legal presumption that information is available by diligent inquiry  Actual Notice – direct, actual or personal knowledge; knowing what has been recorded and personal inspection of property  Inquiry Notice –”caveat emptor”; law presumes a reasonable person would make further inquiry into a property

Priority of Recorded Documents  By date & time of recordation  Subject to priority of unrecorded documents: Direct liens (taxes & special assessments)Direct liens (taxes & special assessments) Statutory liens (estate tax liens, bail bond liens, inheritance tax liens, etc)Statutory liens (estate tax liens, bail bond liens, inheritance tax liens, etc)

Chain of Title Recorded history of all matters affecting title. Includes ownership. Patent Deed- first deed in a chain of title Gap in the chain requires a suit to quiet title or quit claim deeds. If not resolved, brought to court.

Title Search  Examination of public records to determine any defects in chain of title.  Usually goes back years  Abstract of title is a summary report of items only in public records.

Marketable Title  No serious defects, does not expose purchaser to litigation, convinces purchaser that they can sell or mortgage the property. (Typical sales contract requires marketable title)  Unmarketable title can still be transferred, but defects may limit its ownership.

Proof of Ownership Deed by itself is not sufficientDeed by itself is not sufficient Must have evidence of titleMust have evidence of title

Evidence of Title  Certificate of title  Abstract & attorney’s opinion (no deed)  Title Insurance  Torrens System

Certificate of Title  Based on title search  Prepared by title co., licensed abstracter, or attorney Unrecorded liens, rights of parties in possession and hidden defects cannot be detected.

Abstract & Attorney’s Opinion  Uncovers matters of ownership only  Attorney’s opinion is based on abstract Abstract lists only items found in public records.

Title Insurance  Protects mortgagors & mortgagees against loss through defects in title, liens, or encumbrances.  The strongest proof of ownership

Title Insurance  Title Examiner- prepares preliminary title report (“commitment to issue policy”)  Title Plant- headquarters of title company with copies of constructive notice (legal documents)

Commitment for Title Insurance Schedule A:  Sales price  Loan amount (if any)  Name of proposed buyer  Name of existing seller  Legal description Schedule B:  Lists items excluded from coverage

2 Title Insurance Policies PAID ONCE AT CLOSING Owner’s policy (Protection of buyer)  Paid for by seller, because it reduces seller’s liability in case of defects & covers forgeries  Issued at Purchase price  Good as long as buyer or heirs have property Lender’s Policy (Protection for mortgagee)  (ALTA-American Land Title Association)  Paid for by the borrower  Issued on the Loan amount  Good as long as loan is outstanding

Owner’s Policy Standard coverage  Defects in public records  Forged documents  Incompetent grantors  Incorrect marital statements  Improperly delivered deeds  Claims from unknown heirs  fraud

Owner’s Policy Extended coverage  Covers everything in standard policy plus  Property inspection & unrecorded rights of persons in possession  Examination of survey (physical inspection for encroachments, water/sewer lines, additions to house, etc.)  Unrecorded liens not known to policyholder (ie-mechanics liens, any lis pendens)

Owner’s Policy Exclusions  Defects & liens listed in the policy  Defects know to buyer  Changes in land use (ie-zoning)

Lender’s Policy Insures against:  Items in public records (like owner’s policy)  Rights of parties in possession (not in std owner’s policy)  Unrecorded documents & interests (not in std owner’s policy)  Questions of survey & encroachment, physical inspection (not in std owner’s policy)

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

Torrens System Written application to register the title with clerk of county court. Torrens registration is the title. AZ does not use the Torrens system, nor do other places where Title Insurance is prevalent.

Pledging Personal Property When personal property is used as collateral for a loan, you need:  Security agreement – complete item description to which lien applies  Financing statement (UCC-1)-short form that is filed at secretary of state in order to be legal