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Title Insurance and Recording Principles
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Title Insurance and Recording Principles
Title Insurance and Recording Principles
Study
1
Question
What is title insurance according to the study guide?
Page 2
Answer
An insured statement of the condition of title or ownership of real property. For a one-time-only premium, the named insured and their heirs are protected against title defects, liens, and encumbrances existing as of the date of the policy and not specifically excluded from it.
2
Question
How does a title insurance commitment differ from a final title policy?
Page 2
Answer
A commitment is a binding contract to issue a specific title policy showing only listed exceptions and intervening matters, while the policy provides actual coverage after requirements are met.
3
Question
What purpose does an endorsement serve in a title insurance policy?
Page 2
Answer
An addition to or modification of a title insurance policy which expands or changes coverage of the policy, fulfilling specific requirements of the insured.
4
Question
Why are exceptions included in a title insurance binder or policy?
Page 2
Answer
A provision that excludes liability for a specific title defect or outstanding lien or encumbrance, such as easements and restrictions, to limit the insurer's coverage to known or uninsurable risks.
5
Question
What must be satisfied to issue a title policy according to a binder?
Page 2
Answer
Requirements are conditions in a title insurance binder that must be met or cleared before title can be insured and a policy issued.
6
Question
How does an encumbrance affect fee simple title to property?
Page 2
Answer
Anything which affects or limits the fee simple title to property, such as mortgages, easements, or restrictions which do not prevent alienation of the fee title by the owner. Liens are special encumbrances making property security for debt.
7
Question
What causes an encroachment and how is it typically resolved?
Page 2
Answer
Situation when a structure is built wholly or partly on neighboring property due to boundary confusion from incorrect surveys or builder errors. Resolved by easement, lease, moving the structure, or legal action.
8
Question
What role does an underwriter play in the insurance process?
Page 3
Answer
Underwriters analyze applications and reports to decide if a risk is acceptable, set premiums, and write policies, linking the carrier and agent while balancing conservatism and liberality.
9
Question
Why is the chain of title important in real estate transactions?
Page 3
Answer
History of title ownership from present back to original owner, including deeds, estates, foreclosures; title companies search it to issue insurance confirming clear transfer.
10
Question
What occurs during closing and settlement in a real estate transaction?
Page 3
Answer
Final exchange where title transfers, financing executes, title policies issue, costs pay, and documents record; handled by title company, escrow, or attorney per local practice.
11
Question
How does escrow function in a property transaction?
Page 3
Answer
Deposit of instruments, funds, and instructions to an independent third party to carry out agreement provisions; complete when all deposited, transfer upon conditions met.
12
Question
Does Missouri impose a transfer tax on property sales?
Page 3
Answer
No, there is no transfer tax in Missouri paid by buyer or seller on property transfer as evidenced by recorder of deeds.
13
Question
What paper requirements apply to documents for recording in Missouri under RSMo 59.310?
Page 4
Answer
White or light-colored, 20# weight without watermarks or logos, black/dark ink one side only, no continuous forms or permanent binding; stapled acceptable.
14
Question
What margin and formatting rules must Missouri recording documents follow?
Page 4
Answer
First page top 3 inches blank for recorder; minimum 3/4 inch other margins; no smaller than 8-point type (non-essential exempt); legible for reproduction.
15
Question
How must signatures appear on Missouri recorded documents?
Page 4
Answer
In black or dark ink for legible reproduction, with name typed, stamped, or printed underneath.
16
Question
What first-page information is required on Missouri recording documents?
Page 4
Answer
Below 3-inch margin: document title, date, grantors/grantees names, grantee address, legal description, references if required; page reference if insufficient space.
17
Question
Which documents are exempt from Missouri's standard recording formatting requirements?
Page 5
Answer
Pre-2002 signatures, military papers, foreign-executed, certified copies (birth/death), deceased/incapacitated parties, court-required, UCC filings, tax liens/releases.
18
Question
What special recording requirements apply in the City of St. Louis?
Page 5
Answer
All grantees sign conveyance deeds with notary; grantors’ address on first page; legal description includes City Block number (for standard deeds).
19
Question
How do mortgagor and mortgagee relate in a secured loan?
Page 5
Answer
Mortgagor (borrower/grantor) encumbers property with mortgage/deed of trust; mortgagee (lender/grantee) receives collateral, gains title on default.
20
Question
What is simultaneous issue in title insurance?
Page 5
Answer
Issuance of multiple policies on same property where simultaneous policy amount is less than primary, typically owner's and loan policy together.
21
Question
What constitutes a title defect?
Page 5
Answer
Any cloud on title, such as prior lien claim, improper conveyance, or inaccurate property description.
22
Question
What elements define real property?
Page 5
Answer
Land and permanent fixtures from earth's center upward indefinitely, including natural attributes and man-made improvements like minerals, trees, buildings.
23
Question
What is the amount of insurance in an ALTA policy?
Page 6
Answer
The amount stated in Schedule A, as may be increased or decreased by endorsement.
24
Question
How is the date of policy defined in title insurance?
Page 6
Answer
The date designated as ‘Date of Policy’ in Schedule A.
25
Question
What does 'land' encompass in ALTA policy terms?
Page 6
Answer
The land described in Schedule A, and affixed improvements that by law constitute real property.
26
Question
What instruments qualify as a mortgage under ALTA definitions?
Page 6
Answer
Mortgage, deed of trust, trust deed, or other security instrument, including electronic ones authorized by law.
27
Question
Why was the American Land Title Association formed?
Page 6
Answer
Created uniform forms like policies and endorsements for industry-wide use, approved by regulators.
28
Question
What is an Owner’s Policy of Title Insurance?
Page 6
Answer
Issued to fee simple owner, providing coverage against policy-described risks.
29
Question
Under Covered Risk 1 of Owner’s Policy, what is insured?
Page 6
Answer
Title being vested other than as stated in Schedule A.
30
Question
What defects cause coverage under Covered Risk 2(a) of Owner’s Policy?
Page 6
Answer
Forgery, fraud, undue influence, duress, incompetency, lack of authority, improper documents, invalid power of attorney, recording errors, defective proceedings.