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Real Estate Law 8th Edition by Robert J. Aalberts – Test Bank

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Real Estate Law 8th Edition by Robert J. Aalberts – Test Bank

CHAPTER 10

CLOSINGS AND TAXATION; OTHER METHODS

OF ACQUISITION

CHAPTER OUTLINE

  1. Deeds
  1. Types of Deeds
  1. Warranty Deed
  1. Quitclaim Deed.
  1. Formal Requirements
  1. Grantor

Thomas v. A.J Neal, p. 397

  1. Grantee
  1. Addresses
  1. Words of Conveyance
  1. Habendum Clause

In re Tazian v. Cline, p. 398

  1. Description
  1. Exceptions and Reservations
  1. Statement of Consideration
  1. Date
  1. Execution

Poole v. Hyatt, p. 400

Problems 1, 2, 3,

  1. Delivery

Johnson v. Ramsey, p. 402

Problems 4, 5, 8

  1. The Closing Process
  1. Flow of Money
  1. The Mortgage Closing
  1. Appraisals and Appraiser Liability
  1. The Property Closing
  1. Flow of Documents

III. Taxation of Real Estate

  1. Taxation of Seller
  1. Taxation of Buyer
  1. Real Estate Reporting Requirements
  1. Other Methods of Real Estate Acquisition
  1. Death
  1. Wills

In re Estate of Goyette, p. 403

  1. Intestacy
  1. Dower and Homestead

Problem 10

  1. Adverse Possession

Ebenhoh v. Hodgman, p. 405

Problems 6, 7, 9

TEACHING SUGGESTIONS

  1. You might provide your students with a Government Survey description similar to the one in the text and ask a student in the class to locate the property within section drawn on the board. Then ask the class the acreage of the property described. (The property described in the text contains 10 acres: 1/2 x 1/2 x 1/4 x 1/4 x 640.)
  1. The abstract that begins on page 297 in Chapter 8 includes probate documents and a will.
  1. When Abe Lincoln, an experienced lawyer, died intestate, his widow received one-third of his property and his two sons (one of whom was twelve) the remaining two-thirds. Changing Times, January, 1980. Another example of the law of intestate succession is the Motorists Mutual case on p. 308.
  1. You might use the acronym POACH in teaching the requirements for

adverse possession. The Possession must be Open, Adverse, Continuous, and Hostile. See Ohio Real Estate Law 52-53 (Ohio Real Estate Commission, 1974).

  1. To engage your class in a discussion of the importance the Tax Reform Act of 1986 was to the real estate industry, you might assign R. Aalberts, Ronald Reagan: What Is His Legacy to Real Estate? 33 Real Estate Law Journal 118 (Fall 2004), written shortly after the 40th President’s death.
  1. To read more about the new RESPA changes to the HUD-1 settling statement and Good Faith Estimate disclosure initiated in 2010, read R. Aalberts, Seeking a New Balance: Will RESPA’s Latest Reforms Cures What Ails the Real Estate Settlement Servicing Industry? 39 Real Estate Law Journal 1 (Summer 2010).

DISCUSSION OF ETHICAL AND PUBLIC POLICY ISSUES

On page 386 is a discussion of the ethical and public policy issues surrounding the deduction homeowners enjoy for the interest they pay on their mortgages. Under a utilitarian approach, you must weigh the pain versus the pleasure to see if the law bestows the greatest good to the greatest number. Certainly there are millions of homeowners in the U.S. who derive pleasure from this deduction. In addition, this deduction likely allows for more homeownership because homes are more affordable. Neighborhoods made up of homeowners are generally better maintained and safer for families since homeowners have a vital economic and social stake in their homes and so typically take better care of their property and are generally more vigilant about what happens in the neighborhood. For most, a home is their biggest investment and often the source of retirement money when they sell it or use to finance a reverse mortgage upon retiring. Millions of businesses make money from homeowners when they transact sales, finance their loans, maintain their homes, buy furniture etc. If the deduction were to be eliminated, the above pleasure would turn to pain. Pain would also be incurred since some homeowners could no longer afford a home, or at least until the time prices reach a presumably lower level since the tax benefit does create an economic incentive to buy. On the other hand, pleasure would be incurred by the U.S. Treasury that now subsidizes this write-off by taking in less in taxes. They would now take in more money. In recent years, increasingly high deficits in the Treasury are requiring the federal government to borrow billions from domestic and foreign sources. This creates a burden on future generations to pay the debt off. While the mortgage write-off is only one among many deductions, it is a deduction which contributes to the deficit. A final argument may center around those property owners who are also allowed to deduct interest from their second and/or vacation homes. You might like to continue to debate the utilitarian approach by taking on this issue too to see if it can be morally justified..

From a rights and duties point of view, there is a legal right to deduct interest on a mortgage, but is this a right moral as well? Put another way, should the federal government take on a legal and ethical duty for the benefit of homeowners who have this right, as well as those who benefit when people own their homes? Is this as important a right as for example, liberty and property rights in general or is this just political pandering? We may have a natural right as humans to have shelter in order to live a dignified, safe and healthy life, but not a natural right to own a home we may not be able to afford without the deduction and certainly not a natural right to a tax deduction.

Under a fairness and justice approach, similarly situated people are to be treated in a similar manner as to process and outcome. Everyone has the opportunity to have a house as long as they qualify for a loan etc. The Fair Housing Act enforces this right if we are unfairly deprived of this right due to a number of factors. Still, if we classify similarly situated people as all people who have property rights in a home, then renters would not be treated the same in terms of outcome since they cannot deduct their rent. This might be seen as unfair and unjust. Some states, it should be noted, do allow renters to deduct their rent from their state income taxes in order to remedy this perceived inequity.

Obviously, the homeowner’s deduction is highly popular and makes millions of voters happy. Eliminating this right would anger them, as well as many businesses, and cost politicians their jobs. Canada, which has a culture arguably closest to that of the U.S., has no mortgage interest deduction and still has a well functioning housing market. This comparison might be a good point to debate in class. Is there another deduction that might be more important than mortgage interest deduction?

You might also like to discuss the deficit reduction plan issued by a bi-partisan committee in December 2010 headed by co-chairmen, former Senator Alan Simpson and Erskine Bowles. The plan proposes to reduce or end many kinds of deductions, including limiting the extent of mortgage interest that can be deducted. Access the following link for more information: http://www.nytimes.com/2010/11/13/business/economy/13mortgage.html.

On page 396 the ethical issue of whether a good faith requirement should exist for adverse possession. This is a classic fairness versus efficiency argument. Under utilitarianism, the system is probably moral. Adverse possession exists to make more efficient use of land and to prevent or diminish old claims to property that would be very difficult to prove. It also facilitates boundary disputes. While one person, the landowner who has sat on his rights and therefore loses title to his property would suffer a great deal of pain, the overall system causes pleasure by promoting a more efficient use of land and attendant economic consequences and saving of judicial resources by resolving disputes more efficiently.

Under a rights and duties analysis, a landowner has a right which he loses. However, all property owners know or should know that they can lose their rights if they don’t enforce them. This means being vigilant over their land boundaries and occupiers of their land. However, sometimes those who owe duties to respect other’s property rights, such as the McLean’s referred to on page 396, knowingly occupy or use another’s land to gain (some might say steal) another’s property. In this case it could be argued that the rights of property owner’s should be superior to the rights of those who don’t respect other’s property rights, but in fact take advantage of the law. A good faith requirement would help eliminate these kinds of injustices.

One public policy that you might examine is Louisiana’s civil law approach. Under it, a good faith occupier can gain title under a doctrine called acquisitive prescription in 10 years, but a bad faith occupier needs 30 years (see Louisiana Civil Code Article 3651 et seq.) In most states it takes much less than 30 years and bad faith is not an issue. This more middle of the road approach protects rights while promotes the efficient use of property.

IMPORTANT CONCEPTS AND RELATIONSHIPS FOR STUDENTS TO KNOW

  1. Know the voluntary and involuntary methods for transferring title to property.
  2. Know what a deed is and the legal purposes a deed carries out.
  3. Know the type of deeds that exist and what interests they protect, particularly from the grantee’s perspective.
  4. Know the three warranties or protections a general warranty deed provides.
  5. Know why, despite the warranties, closings normally requires title examination, title opinion and/or insurance.
  6. Know exactly what a quit claim deed provides for the grantee.
  7. Know all the elements and clauses contained in a deed and what they accomplish.
  8. Know the legal requirements for being both a grantor and a grantee.
  9. Know about the role of consideration in a deed.
  10. Know the three elements required for a legal transfer of a deed.
  11. Know in general how the closing process works.
  12. Know about the role of appraisers, appraiser liability for negligence and the implications of overstating value in an appraisal.
  13. Know the new changes under RESPA included in the revised HUD-1 settlement statement and the Good Faith Estimate disclosures and what they aim to do to better protect residential home buyers.
  14. Know about the new Home Valuation Code of Conduct requirement in which an appraisal management company selects appraisers.
  15. Know what taxes both sellers and buyers must pay in real estate transactions and ownership, as well as the tax advantages available in owning investment property.
  16. Know the main kinds of wills that are used in the states with special attention to the form required in the deeds.
  17. Know what intestacy means and how these statutes commonly work.
  18. Know in general how dower, curtesy, elective share and homestead function.
  19. Know the policy reasons underlying adverse possession.
  20. Know the elements of adverse possession.
  21. Know the difference between color of title versus claim of right and how these can make a big difference in what the claimant gains in a successful suit.
  22. Know what an action to quiet title accomplishes.

ANSWERS TO TEXT PROBLEMS

  1. They do not have title. In Nilson v. Hamilton, 174 P. 624 (1918), the court concluded that there “was no person in existence in law, named in the deed, authorized to receive, or who had the legal capacity to receive, the title to the premises.”
  1. The deeds are not valid. In Stalting v. Stalting, 217 N.W. 390 (1927), the court held that “there was no completed deed at the time of signing by the grantor, nor in his lifetime. An essential and necessary element, a named or designated grantee, was entirely lacking.”

It could be argued that the banker was entitled to complete the deeds as Julius’

agent. However, this argument fails for two reasons: (1) the agency was not in

writing and (2) the agency would be revoked by the death of the principal, Julius,

before the deeds were completed.

  1. Eliza Ann has title to the property. The court in Scanlan v. Right, 30 Mass. (13 Pick.) 523 (1833), focused on the issue of whether the conveyance was defective because the grantee’s maiden name was used. “She bore the name of Eliza A Castin, till her marriage; and it appears, that she was the person intended and understood by the grantor, that he used the name by which he had known her, and by which she had always been known till her marriage, and it does not appear that her marriage and change of name were known to Bishop Fenwick, who conveyed the estate to her in execution of a trust. We think it was no violation of the rule, which rejects parol evidence when offered to contradict or control a deed, to show that the petitioner was the person to whom the grant was made, that she was in fact known by her maiden name to some persons and especially to the grantor, and that there was no other person claiming to bear the name used in the deed, or claiming title under it.”
  1. The sister is not correct; Maggie has valid title to the land. The court in Jones v. Saunders, 119 S.E.2d 789 (1961), noted that “both the delivery of the instrument and the intention to deliver it are necessary to the transmutation of title…. [A] presumption of delivery arises from registration, even after the death of the grantor.”

However, the court decided that a presumption of delivery was unnecessary

because it concluded that the following facts showed an intent to deliver the deed: “Charlie Overman had the land surveyed, caused the deed to be prepared, signed it, manually delivered it to defendant, permitted her to put it with her other valuable papers and for ten years made no attempt to retrieve it or interfere with her access to and possession of it, though he could have physically retaken it. . . .”

  1. No, Mahala does not own the real estate. The court in Watkins v. Watkins, 272 S.W. 396 (1925), held that the sons had valid title to the property because “the title of land passed from [Mahala to [her sons]… upon execution and delivery of the former deeds.”
  1. Miller is correct. The court in Miller v. Cumberland Petroleum Co., 108 S.W.2d 514 (1937), held that the church did not acquire a title by adverse possession. “If this were a case where after Miller had vacated the premises, the church had inclosed the Miller lot with its own lot, a different question would be presented. [But] the trustees of the church had no title whatever. The only way that they could acquire title by adverse possession was to enter upon the Miller lot and hold it adversely for fifteen years. To do this, it was necessary that the possession be actual, open, notorious, exclusive, hostile, and continuous for that period. To

that end there must have been such open and notorious acts of physical possession as would put the owner upon notice of the assertion of a hostile claim … and such possession must have been so continued as to furnish a cause of action every day during the whole period.”

  1. Isabel is not correct. The court, in Monroe v. Rawlings, 49 N.W.2d 55 (1951), ruled that Edwin had obtained title by adverse possession. In noting the requirements for adverse possession, the court stated that it is sufficient if the acts of ownership are of such a character as to openly and publicly indicate an assumed control or use such as are consistent with the character of the premises in question.” The court found that Edwin “acquired title by adverse possession for over 15 years consisting of such open and public use, acts of ownership and assumption of control as were consistent with the character of the premises and to which alone the land was adapted.”
  1. The widow is correct. The court, in Costello v. Costello, 73 A.2d 333 (1950), held that the deed was not effective for lack of delivery. “The delivery of a deed includes not only an act by which the grantor parts with possession of it, but also a concurring intent on the part of the grantor that it shall vest the title in the grantee…. To constitute a delivery, the grantor must part with the legal possession of the deed and of the right to retain it.” James’ own attorney kept the deed and there was no proof that ‘James had given up control of the deed. The court concluded that “one may not make a valid transfer of property where the intent is not to convey a present interest, but solely to create interests which will arise at death, except in compliance with the requirements of the Statute of Wills; and any

such attempted transfer is void.”

  1. West is not correct. The court in West v. Tilley, 306 N.Y.S.2d 591 (1970), held that Tilley had obtained title by adverse possession. “Into the recesses of his mind, his motives or purposes, his guilt or innocence, no inquiry is made. . . . The very nature of the act is an assertion of his own title, and the denial of the title to all others. It matters not that the possessor was mistaken and that had he been better

informed, would not have entered on the land . . . Adverse possession, even when held by mistake or through inadvertence, may ripen into a prescriptive right after 20 years of such possession. . . the actual physical occupation and improvement being in a proper case, sufficient evidence of the intention to hold adversely . . . ” This case adopts the majority rule cited at the top of page 394, footnote 70.

  1. This question is meant to stimulate class discussion about the ethical and public policy issues surrounding homestead exemptions. In some states, these laws protect all of a homeowner’s equity from general creditors. Yet, people who, before 2005, sought Chapter 7 bankruptcy protection sometimes abused homestead exemption laws. They were allowed to discharge most, if not all of their debts permitting them to get a fresh start with a large amount of equity in their homes that they could liquidate after bankruptcy. Creditors were deprived of assets they might normally seize, such as stocks, bonds, and cash, since they were liquidated and shielded by the debtors’ homestead property. This problem for creditors has been mitigated since the passage of the Bankruptcy Protection Act of 2005. Now a person seeking Chapter 7 must qualify under a “means” test. People of great wealth who used to be able to discharge all their debts and still have a great deal of money in their homestead would not qualify under this test. However, those above the means test can still seek protection from creditors under Chapter 13 which would require them to pay creditors over a four to five year period as directed by the bankruptcy court. Still, the bankrupt parties are allowed to keep the equity in their homes since it will be protected by the homestead exemption, subject to the new exceptions discussed below.

The shielding of unlimited equity in a homestead may not be morally justified under a utilitarian approach. While it creates some good by protecting certain vulnerable debtors, such as farmers (e.g., under legislation in Iowa, Kansas, South Dakota and Texas), businesspersons in high-risk businesses (oil and gas and ranching in Texas), and retirees (Florida), it may not create an overall good for the greatest number in those states. This is because the cost of mortgage loans may rise because creditors would be forced to increase what they charge to compensate for the losses they suffer from these elusive debtors. Thus, all borrowers in these states may be paying more for the good gained by a minority of borrowers.

Borrowers in these states have a legal and moral right to shield their assets in their homesteads. However, the creditors were granted the legal and moral right to be paid under a contract. Thus, there are legal rights created by both operation of law and contract. Legally, the right of the homestead debtor overrides the rights of the creditors. But should it morally? An argument could be made that the contractual rights should have legal and moral priority over rights created by operation of law. Put another way, the debtors obligated themselves under contract to pay their creditors, but now state law is allowing them to get out of paying these debts by shielding their assets in their homestead. Thus, should their moral and legal commitments supercede rights under law? You may want to relate the story of the late President Harry Truman, who went bankrupt after failing in the haberdashery business. Truman, although not legally required, eventually paid off his debts because he felt he had a moral duty to do so.

Under principles of fairness and justice, similarly situated people should be treated in the same manner in terms of process and outcome. An assumption must be made about who are similarly situated borrowers. If all borrowers, whether they own homestead property or not, are similarly situated, then those without homestead property are being treated more unfairly than those with such property. However, if similarly situated is interpreted to mean only those borrowers with homestead property, the outcome is fairer since they are all afforded the same processes, although the effect or outcome may differ.

An argument can also be made concerning similarly-situated homestead property owners in other states. For example, a person in Louisiana in the 1980s could only shield $15,000 in equity in her homestead at the time, while a person in neighboring Texas had no limit. Thus, the many Texans who went bankrupt in that decade were much better off than the many Louisiana citizens who also went bankrupt due to the collapse of the oil and gas industry that ravaged both states. This is an unfair outcome. For this, among other reasons, Congress sought to create more uniformity among the states’ homestead exemptions in the 2005 bankruptcy reforms.

It is interesting to note that much of the legal and ethical issues attributed to the homestead exemption has been altered. Since the passage of the Bankruptcy Act in 2005 a person seeking bankruptcy protection cannot move to a state like Texas and Florida and shield themselves from creditors under those states’ unlimited homestead exemptions. In fact, they must be state citizens for at least 3.3 years to be protected. If this law would have been in effect in the 1990s, OJ Simpson would have been in dire economic straits since he has been able to shield much of his wealth in his Florida home. In addition, in the case of the former Enron and Worldcom executives, they can only take up to $125,000 even in the unlimited or high homestead exemption states if they owe civil judgments for intentional torts or violations of state or federal securities laws.

Test Bank

ESSAY QUESTIONS

  1. John Caldwell signed and delivered the following document to his

wife, Nannie.

State of Georgia, Floyd County: This indenture made this

16th day of August, 1904, between J.W. Caldwell of the one

part, and Mrs. Nannie E. Caldwell, his wife, of the other part,

for the consideration of love and con [af]fection does will all

the tract or parcel of land as follows, twenty acres of land in

the South west comer of lot #52 in 22nd and third district of

Georgia. I will that Mrs. Nannie E. Caldwell hold the pond and

ginnery on said lot of land. Also twenty acres off of lot 21 in

the South East comer of said lot. I will the line of Mrs.

Nannie E. Caldwell go to the railroad. In testimony whereof

the said party of the first part has hereunto set his hand and

seal the day and year above written.

[Signed] John W. Caldwell. [Witnesses] B.C. Hucks.

S.G.N. Cates, J.P.

Is this a valid conveyance? Why?

  1. Jennie was the owner of an 80-acre farm that contained a large stone quarry. In appreciation of the assistance provided by her now deceased brother, Virgil, in operating the farm, Jennie executed a properly witnessed will that provided that the 80-acre farm was to go to Virgil’s widow, Jessie. Jennie delivered the will to her niece with instructions that the will contents were to remain secret and that the will was to be kept in the niece’s safety deposit box. Later, Jennie asked her neighbors to prepare a deed, which was not recorded, leaving the 80-acre farm to Wayne and Wesley, Virgil’s sons. Jennie delivered the deed to Wayne so that he

could read its provisions. She explained that she wanted the brothers to have the farm, but said she wanted to maintain possession of the deed and did not want anyone to know of the conveyance until after her death. Wayne agreed and at Jennie’s death, Wayne, Wesley and Jessie all claim to own the property. Who is the lawful owner? Why?

  1. James owned a life estate in a farm and Melford owned the remainder interest. James and Melford agreed to sell their farm to Mo. On October 5, they executed a deed to Mo and the deed was held in escrow by a bank until Mo delivered a check for the purchase price, $300,000. James was killed in an automobile accident on October 25 and Mo delivered the check on November 29. James’ estate claimed that the proceeds should be divided between the estate and Melford, as the parties had originally agreed. Melford claims that he is entitled to the proceeds because he was the sole owner when the deed was delivered on November 29. Who is correct? Why?
  1. Benjamin Robinson, 80 years of age, owned a house and lot. He made an agreement with Robert and Elaine Gross that in exchange for the home owned by Benjamin, the Grosses would care for him, pay certain bills, assume his necessary living expenses from time to time and, upon his death, pay his funeral and burial expenses. Benjamin’s attorney executed a quitclaim deed and also acted as escrow agent. Benjamin did not reserve any right to recall or control the deed. The escrow agreement provided:

Escrow Agreement

It is hereby agreed by and between Ben Robinson, as first

party, and Robert F. Gross and Elaine Marie Gross, as second

parties, that the certain quit claim deed executed by the first

party to the second parties be and hereby is deposited with

Walter O. Estes, in escrow to be delivered for record only upon

the death of the first party, it having been executed and

delivered subject to this escrow agreement between the

parties.

The purpose of this escrow is to guarantee the care and

support of the first party by the second parties during first

party’s lifetime, and the payment by the second parties of the

first parties burial expenses and a balance of $55.00 due the

Robinson-Barbier Funeral Home, and $80.00 due the Edward W.

Sparrow Hospital.

Ben Robinson

First Party

Robert F. Gross

Second Party

Elaine Marie Gross

Second Party

Walter 0. Estes

Mildred Chamberlain

The Grosses lived with Benjamin only for a short time before a dispute arose

between them resulting from Benjamin’s drinking habits. Benjamin left the

house claiming he did not want to live there and wanted the Grosses ejected.

He ordered the escrow papers destroyed and he died thereafter. Benjamin’s

heirs claim they own the house now occupied by the Grosses. Are they

correct? Why?

  1. Waldo was going on a dangerous mission to Saline. Knowing that he might not return, he prepared a deed to his home, naming his sister as grantee. He then mailed the deed to his sister, not with the intention of passing title, but with the express oral understanding that she would check the legal description to see if it accurately described the property. If Waldo does in fact return from Saline, who owns the home? Why?

TRUE-FALSE QUESTIONS

  1. A deed is a written or oral conveyance of real estate from one party to another. FALSE

.

  1. From the buyer’s perspective, it would be preferable to have a special warranty over a general warranty deed. FALSE

8.Jeremy gives Mike a quitclaim deed to the Empire State Building. Since Jeremy does not really own any property interest in the building, Mike could sue him for rescission and damages. FALSE

  1. A fictitious name can be used for the grantor, as long as the real grantor can be easily identified. TRUE
  1. A deed must include the addresses of the grantor and grantee. FALSE
  1. The habendum clause states what interest in land is being conveyed to the grantee. TRUE
  1. An exception is something taken back from the grant of real estate

while a reservation is some part of the estate which is not granted. FALSE

  1. Generally, courts are not concerned with the adequacy of consideration stated in a deed. TRUE
  1. An acknowledgment made by a notary of the grantor’s and the witnesses’ signatures is not required to make a deed legally valid. TRUE
  1. A will that has been properly executed is effective upon delivery

to the beneficiaries during the testator’s life. FALSE

  1. The tax on proceeds from the sale of real estate is sometimes deferred. TRUE
  1. A holographic will is one approved by a religious institution. FALSE
  1. State intestacy laws never distinguish between real and personal property. FALSE
  1. Dower and homestead laws insure that a wife will have a home during the life of her husband. FALSE
  1. It is never possible to claim real estate by adverse possession unless there is actual possession of the land. FALSE

MULTIPLE CHOICE QUESTIONS

(Correct Answers are in Boldface)

  1. David delivered a deed to his farm to an independent third party, Ann, with instructions that the deed be delivered to Sissy at his death. At David’s death, his only heirs, sons Larry and Harry, claim ownership of the farm. The owner of the farm is:

(a) David’s estate.

(b) Sissy.

(c) Ann.

(d) Larry and Harry.

(e) None of the above.

  1. A valid deed must include:

(a) the grantee’s name.

(b) a warranty of title

(c) the grantor’s address.

(d) a date.

(e) all of the above. .

  1. In a covenant of seisin, the seller warrants that:

(a) he has good title and the right to convey the real estate.

(b) there are no encumbrances, such as a lien or an easement on the property, except those disclosed.

(c) the property will not be taken by someone with a better title.

(d) the consideration paid for the property is adequate.

(e) the terms of the real estate contract will survive the closing.

  1. A seller of real estate who wishes to expose herself to the least amount of legal risk when she sells her property would want to use which of the following deeds?

(a) General warranty deed.

(b) Special warranty deed.

(c) Bargain and sale deed.

(d) Quitclaim deed.

  1. A description of property that uses distances and directions based on monuments, such as a tree or a rock, is called:

(a) government survey.

(b) metes and bounds.

(c) plat.

(d) informal description.

  1. Trahan privately signed the deed to his property naming his daughter Beverly as grantee. He did not, however, tell her what he had done. Trahan continued to live and pay taxes on the property. When he died, Beverly discovered the deed in Trahan’s safety deposit box. She now claims she has been the owner from the time her father signed the deed and placed it in the safety deposit box. Beverly:
  • is correct, since delivery to a safety deposit box is a normal

way to deliver title to property.

(b) is not correct, since the deed must be delivered to her when her father, the grantor, is alive.

(c) is not correct, since a grantee’s acceptance of the deed is never presumed although delivery of title to a safety deposit box is a legal means of delivery once a grantor dies.

(d) is not correct, since it was executed privately and therefore is not legal because her father’s signature was not acknowledged by a notary.

  1. Under the Home Valuation Code of Conduct (HVCC), appraisers today are selected by:

(a) Fannie Mae.

(b) the lender.

(c) an appraisal management company.

(d) by the real estate agent representing the buyer.

  1. A homestead:

(a) is the family home and the land surrounding it.

(b) can be sold by either spouse.

(c) is typically not protected from the actions of creditors.

(d) all of the above.

  1. If an individual claiming property by adverse possession has color of

title:

(a) constructive possession instead of actual possession may be allowed.

(b) the amount of land claimed is measured by the description in a deed.

(c) Possession need not be continuous.

(d) two of the above. (a and b)

  1. Appraisers of residential property:

(a) can never be liable to the buyer for a negligent appraisal if the appraisal was required by the lender.

  • cannot be liable to the buyer if the property is secured by a FHA or VA loan.

(c) can be liable to the lender for a negligent appraisal since the contract to appraise the property is between the lender and the appraiser.

(d) two of the above. (b and c)

ANSWERS TO INSTRUCTOR’S MANUAL QUESTIONS

ESSAY ANSWERS

  1. The court in Caldwell v. Caldwell, 79 S.E. 853 (1913), held that the paper relied on by Nannie was not an effective deed. The court noted

that the maker may have “intended to execute a deed of the land to his wife,

but he signally failed in selecting apt words of conveyance…. The

maker of this paper did not use any word indicating an intention to convey a present estate to his wife. The words that he ‘does will’ the land to his

wife mean that he gives it to her at his death; it is the expression of

testamentary act. There is nothing in this paper which can make it

effectual as a conveyance of property.” [End quotes?]

  1. The court in Shroyer v. Shroyer, 425 S.W.2d 214 (1968), held that

the deed was not effective because of nondelivery. The court noted that “a

presumption arises where there is an unequivocal showing that grantee was

given possession of the deed…. The showing is equivocal in this case for here the evidence indicates that grantor handed it to one of the two grantees momentarily, for the purpose of reading it and that at grantor’ direction it was immediately taken back into grantor’s possession to be kept by her until her death. A presumption of delivery does not arise under these circumstances.” The court also noted that “there is a presumption of nondelivery, in view of the conceded fact that the deed was in grantor’s possession at the time of her death and that the deed was not then recorded.”

  1. Technically Melford is correct. However, the court in Donnelly v. Robinson, 406 S.W.2d 595 (1966), decided that it would apply the relation back rule in order to effectuate the intention of the parties and that the proceeds should be divided pursuant to the original agreement.
  1. The heirs are not correct. The court in Gross v. Housner, 34 N.W.2d 38 (1948), held that Robert and Elaine Gross were the rightful owners of the property. “When a deed which has been duly executed has been put into the hands of a third person, to be by him delivered to the grantee at a future time, or upon the performance of certain conditions, or the happening of some event, it is said to be delivered ‘in escrow,’ and the deed will not be effective unless the condition be performed or the event happens, and the Michigan courts have consistently held that, where a grantor makes a deed to another and deposits the deed with a third party, to be held by such third party until the grantor’s death, and to be delivered to the grantee named in the deed, the grantor reserving no dominion or control over the deed during his lifetime, a valid delivery is thereby made, and an

immediate estate is vested in the grantee, subject to a life estate in the grantor.”

  1. Waldo owns the home. There was no legal delivery of the deed because Waldo mailed the deed to his sister only to enable her to check the accuracy of the legal description.

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