Transfer of Title Practice Questions

Explanation: A mortgagee's (lender's) title insurance policy protects the lender's security interest in the property. It covers the lender up to the outstanding loan balance. An owner's policy protects the buyer's equity interest.

Explanation: A general warranty deed provides the broadest protection, with the grantor warranting title against any defects or claims — even those arising before the grantor's period of ownership. A special warranty deed only warrants against defects arising during the grantor's ownership. A quitclaim deed conveys whatever interest the grantor has without any warranties.

Explanation: Title passes when a deed is properly delivered by the grantor and accepted by the grantee. Recording is NOT required for the deed to be valid between the parties — it provides constructive notice to the public and protects against subsequent claims. The grantee's signature is generally not required on a deed; the grantor must sign. The consideration stated in the deed may be nominal.

Explanation: A quitclaim deed transfers whatever interest the grantor may have in the property — which could be full title, partial interest, or no interest at all — without any covenants or warranties. Quitclaim deeds are commonly used to remove clouds on title, transfer property between family members, or clear up defects, not typically in arm's length sales.

Explanation: Recording a deed in the public land records provides constructive notice — notice that the law presumes everyone knows, whether or not they have actually inspected the records. This protects the new owner against claims by subsequent purchasers or lien creditors. Actual notice is direct knowledge of a fact; constructive notice is presumed knowledge based on what the public records show.

Explanation: A cloud on title is any document, claim, lien, or encumbrance that appears in the public record and casts doubt on the owner's ability to convey marketable title. Examples include old mortgages not formally released, incorrect legal descriptions, disputed boundary lines, or unresolved judgment liens. Clouds are typically resolved through a quiet title action or deed correction.

Explanation: Adverse possession is an involuntary method of transferring title. The claimant must occupy the land in a manner that is open and visible (notorious), continuous for the statutory period (varies by state, typically 5–21 years), hostile (without the owner's permission), actual, and exclusive. Meeting all elements allows the adverse possessor to bring a quiet title action to legally obtain title.

Explanation: An unreleased mortgage lien is a cloud on title that must be resolved before the property can be conveyed with marketable title. The appropriate remedy is to obtain a formal release (satisfaction of mortgage) from the lender of record. Title insurance does not eliminate the lien — it insures against the risk. A quitclaim deed merely transfers whatever interest the grantor has, including the cloud.

Explanation: A properly executed and recorded deed is the legal instrument that evidences the transfer of title to real property. Recording the deed in the public record gives constructive notice to the world and protects the new owner's title against subsequent claims. While the purchase contract creates the obligation to sell, and delivery transfers title, recording provides the best long-term protection.

Explanation: A sheriff's sale (execution sale or forced sale) is an involuntary alienation of title in which a court orders real property sold at public auction to satisfy an unpaid money judgment against the owner. The highest bidder at the sale receives a sheriff's deed (often with limited warranties). Escheat transfers property to the state when an owner dies without heirs or a will.