Real Estate Sales Transfer of Title Questions and Answers

Question 1

A seller is conveying property to a buyer and wants to guarantee the title is clear only for the duration of their own ownership, not against any prior defects. Which type of deed would accomplish this?

Accepted Answer

Special Warranty Deed

Answer

A special warranty deed warrants the title only against defects that arose during the grantor's (seller's) period of ownership. A general warranty deed provides the broadest protection, covering the property's entire history. A quitclaim deed offers no warranties at all. A bargain and sale deed implies the grantor holds title but offers no express warranties against encumbrances.

Question 2

The process by which a government entity can acquire privately owned real estate for public use, after providing just compensation to the owner, is known as:

Accepted Answer

Condemnation

Answer

Condemnation is the legal process of exercising the power of eminent domain to take private property for public use. Escheat is the reversion of property to the state when an owner dies without heirs. Adverse possession is acquiring title through open and notorious use. Foreclosure is the seizure of property for non-payment of a mortgage debt.

Question 3

For a deed to be valid and effectively transfer title, several elements are essential. Which of the following is NOT a requirement for a valid deed?

Accepted Answer

Signature of the grantee

Answer

A valid deed must be signed by the grantor (the one giving the property), but it does not need to be signed by the grantee (the one receiving it). Acceptance by the grantee is required, but this is typically presumed upon delivery and does not necessitate a signature on the deed itself.

Question 4

A property owner sells their house to Buyer A, who pays in full but fails to record the deed. A week later, the owner fraudulently sells the same house to Buyer B, who is unaware of the prior sale. Buyer B immediately records their deed. In a 'notice' jurisdiction, who generally has superior title to the property?

Accepted Answer

Buyer B, because they were an innocent purchaser for value without notice.

Answer

Recording acts are designed to protect innocent parties. In a 'notice' jurisdiction, a subsequent bona fide purchaser (one who pays value without notice of a prior unrecorded interest) has superior title over a prior unrecorded claim. Because Buyer B was unaware of the sale to Buyer A and recorded their deed, they are protected.

Question 5

A homebuyer purchases an owner's title insurance policy at closing. What is the primary function of this policy?

Accepted Answer

To protect the buyer from financial loss due to title defects that existed prior to the purchase.

Answer

An owner's title insurance policy is a contract that protects the new owner against financial losses from past events, such as forged deeds, undisclosed heirs, or recording errors that could cloud the title. It looks backward in time to protect against pre-existing defects. It does not cover physical condition or future appreciation. The lender's interest is protected by a separate lender's policy.

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Practice Test

Real Estate Sales Transfer of Title Questions and Answers