Deeds and title questions test your knowledge of how property ownership is transferred and how title defects are discovered and insured against.
A general warranty deed provides the highest protection, with the grantor guaranteeing clear title against all claims. A bargain and sale deed (common in NY) transfers whatever interest the grantor holds, with limited warranties. A quitclaim deed transfers whatever interest the grantor has with no warranties at all.
A valid deed must have: a competent grantor, an identifiable grantee, a legal description of the property, words of conveyance (granting clause), the grantor's signature, and delivery and acceptance. A deed does not need to be recorded to be valid, but recording provides constructive notice.
Title insurance protects against defects in the title that were not discovered during the title search. A lender's policy protects the mortgage lender. An owner's policy protects the buyer. The lender's policy is typically required; the owner's policy is optional but recommended.
NY is a race-notice state: the first buyer to record without notice of a prior claim has priority. Recording a deed provides constructive notice to the world. Unrecorded deeds are valid between the parties but may not protect against subsequent purchasers.
1. A buyer is purchasing a bank-owned (REO) property after foreclosure. The bank transfers title using a document that conveys only whatever interest the bank holds, with no warranties whatsoever. This type of deed is called a:
A quitclaim deed conveys only whatever interest the grantor has, with zero warranties. Banks selling foreclosed properties routinely use quitclaim deeds because they cannot make warranties about a property's title history before they acquired it. The buyer takes whatever title the bank has, with no protection if title defects are later discovered.
2. A buyer's lender requires title insurance. After closing, the buyer discovers that a prior owner had an unresolved mechanic's lien that was not found in the title search. Which policy will cover the buyer's loss?
The lender's title policy protects the lender's mortgage interest, not the buyer. For the buyer to be protected, they must have their own owner's title policy. A mechanic's lien that existed before the policy date is exactly the type of title defect owner's title insurance is designed to cover. The lender's policy only protects up to the loan amount and only benefits the lender.
3. Seller conveys Greenacre to Buyer A on January 1 but Buyer A does not record the deed. On February 1, Seller (fraudulently) conveys Greenacre to Buyer B, who pays full value, has no knowledge of the prior sale, and records immediately. Under NY's race-notice recording system, who owns Greenacre?
Under New York's race-notice recording system, a subsequent purchaser who (1) pays valuable consideration, (2) has no actual or constructive notice of the prior unrecorded deed, and (3) records first, prevails over the prior unrecorded grantee. Buyer B meets all three requirements. This outcome, while harsh to Buyer A, is the purpose of the recording system. It punishes those who fail to record.
Abstract of Title
A condensed history of all recorded documents and proceedings that affect the title to a specific parcel of real property.
Chain of Title
The complete history of all transfers of ownership of a property, from the original grant to the current owner.
Closing
The final step in a real estate transaction where ownership is officially transferred from seller to buyer.
Cloud on Title
Any outstanding claim, lien, or encumbrance that casts doubt on the validity of an owner's title to property.
Deed
A written legal document that transfers ownership of real property from a grantor to a grantee.
Quiet Title Action
A lawsuit filed to establish clear ownership of real property and remove any claims or clouds on the title.
Recording
The act of filing a deed or other document in the county clerk's office to provide public notice of a real estate interest.
Title Insurance
Insurance that protects against financial loss from defects in a property's title that existed before the policy was issued.
Study Deeds & Title in depth
Unlock the full study module with explanations, flashcards, and Carl, your AI tutor who can answer any question about this topic.
Start studying free →No credit card required
click for a haiku!