Real Estate Sales Exam Transfer of Title 3

Question 1

Title that is free from reasonable doubt and marketable to a reasonably prudent buyer is called:

Accepted Answer

Merchantable title

Answer

Merchantable (or marketable) title is title that a reasonable, informed buyer would accept and that a court would compel a buyer to accept.

Question 2

An abstract of title is BEST described as:

Accepted Answer

A condensed history of all recorded documents affecting a parcel

Answer

An abstract of title is a chronological summary of all public records relating to a property, used by an attorney to render a title opinion.

Question 3

Which of the following BEST describes 'constructive notice'?

Accepted Answer

Knowledge the law presumes a person has because records are publicly available

Answer

Constructive notice is the legal presumption that a person knows information available in public records, regardless of actual knowledge.

Question 4

Title insurance that protects a lender's security interest in a mortgaged property is called a:

Accepted Answer

Lender's (mortgagee's) policy

Answer

A lender's title insurance policy (mortgagee policy) protects the lender's mortgage lien up to the loan amount and is typically required by the lender.

Question 5

Under a 'race-notice' recording statute, a subsequent purchaser is protected only if they:

Accepted Answer

Record first AND had no notice of the prior conveyance at the time of purchase

Answer

A race-notice statute protects a subsequent purchaser who records first AND purchased without notice of a prior unrecorded conveyance.

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Transfer of Title 3