Real Estate Law Exam2

• •A written instrument that transfers ownership of property from a grantor to a grantee
• • Attested to by at least two witnesses, one of whom is a notary public
• •Supported by good and valuable consideration
• •Properly signed and delivered to the grantee, who accepts it
• The form and content of deeds vary among states, and the laws of the state in which the subject real property is located will govern the types of deed available.
• Our discussion focuses on the requirements of deeds in Georgia.
• A deed creates a contractual relationship between the grantor and the grantee, so the deed must also comply with the rules of contract validity that were discussed in a previous chapter, such as consideration, which is something of value being given by each party

• •A party's vesting deed is the deed by which that party takes title to real property
• •Every past and current owner of a parcel of real property has his own vesting deed for that property

• Georgia recognizes several different types of deeds of conveyance, with the most common being general warranty deeds, limited warranty deeds and quitclaim deeds.
• In the context of a purchase and sale, a well-written purchase and sale agreement will specify which type of deed is to be signed by the grantor at closing to convey title to the grantee.
• Georgia also recognizes specific-use deeds that apply in certain types of situations, such as in the event of death of the grantor where the property is passing from the grantor's estate.

• •Promises
• made by the grantor in a deed of conveyance

• •Regarding
• title to the real estate

• •Gives
• a warranty to protect the grantee's interest in the real property if one of
• these covenants fails

• The
• grantor has legal ownership of the property

• The
• grantor has the right to sell the property

•

• There
• are no unresolved claims or issues that could interfere with the grantee's use
• and enjoyment of the property

• There
• are no outstanding liens, judgments or other matters, apart from known title
• defects, that could adversely impact the grantee's ownership

• The
• grantor will defend the grantee's title to the real property, by cooperating
• with the grantee's defense efforts and supplying evidence or testimony, against
• all persons whomsoever, in the event that the grantee's title to the property
• is challenged

• The
• grantor will not do anything to negatively impact the grantee's title to the
• property once title has transferred from the grantor to the grantee

• •These
• deed covenants vest in the grantee the power to pursue legal action against the
• grantor if any deed covenants fail

• •These
• covenants may be limited by the type of deed executed (signed) by the grantor

• •There
• are also statutory time limits on bringing an action for breach of deed
• covenant

• Although
• these deed covenants and the warranties supplied by the grantor are important
• for the protection of a grantee, there are statutory time limits and liability
• limits on a grantor’s obligations under these covenants that limit a grantor’s
• responsibility for defending a grantee’s title to the property. O.C.G.A. § 44-5-66.

• •Contains
• the grantor's warranty to defend the grantee's title in the event of a failure
• of one or more of the deed covenants

•

• •Effect
• of warranty clause

• •Indicates
• the county and state where the deed was executed by the grantor

•

• •The
• caption does not necessarily reflect the county and state where the real
• property is located.

• •Contains
• the date of the deed

and

• •the
• identity of the grantor(s) and grantee(s)

• •Contains
• a recital of consideration

• •Nominal
• Consideration recital is used in Georgia

• •The
• most common amounts of nominal consideration are $1.00 and $10.00

• "love
• and affection"

• The
• grantor's consideration is the conveyance of title to real property, and the
• grantee's consideration is the payment of the purchase price in exchange for
• the receipt of the real property. The
• deed is the document that memorializes the actual transfer of property
• ownership.

• Notice
• that the sample deed does not refer to the actual purchase price of the
• property; this is true for most deeds.
• Instead, deeds use a nominal consideration recital
• saying, for example, "for $10.00 and other good and valuable
• consideration".

• If
• the conveyance being made is a gift, then the consideration recital will
• provide that grantee’s substitute for consideration is

• •An
• exact description of the location and boundaries of the property

•

• •Encompasses
• more than just the property’s street address

• Sometimes,
• the legal description is too long to fit on page one of the deed; in this case,
• the deed preparer may attach a second page as an exhibit for the legal
• description. On the face of the deed would be written "See Exhibit
• A," and in Exhibit A, the legal description would appear. This will cause the deed to be two pages,
• instead of one page, which is perfectly legal, although it will be slightly
• more expensive to record the deed in the public records.

• Later
• in the course, you will study legal descriptions in more detail

• •Begins
• with "To Have and to hold"

•

• •Indicates
• what type of estate is being transferred

• The
• most common form of estate granted is fee simple

• •The
• area of the deed in which it is signed

• •Signed
• by grantor(s)

• •Grantee(s)
• do not sign

• •Grantor’s
• signature must be witnessed by two people, one of whom is a notary public.

• Another
• word for “sign” is “execute”

• If
• a business entity is the grantor, the individual(s) signing for the entity must
• have legal authority to bind the entity.
• We will discuss in detail the format of signature blocks in Chapter 11.

• If
• more than one grantor signs the deed, the same witness and notary may be used
• for both signatures, so long as both grantors signed in the presence of the
• witness and notary.

• •Return
• Instructions

• –Address where the original deed should be
• returned after it has been recorded in the public records

–

• •Limiting
• Language

• –Limits the scope of grantor’s
• warranty. For example, “This conveyance
• is made subject to all zoning, ordinances, easements and restrictions of
• record.”

• Return
• Instructions - although in reality the closing attorney should include a
• self-addressed, stamped envelope with the documents to be returned.

• Limiting
• Language - This type of "subject to" language is also referred to as limiting
• language, and
• may be included in a warranty deed as a means of limiting the scope of the
• grantor’s covenants with regard to matters of public record. Our sample deed is made subject to "all
• zoning ordinances, easements and restrictions of record."

• •Also
• known as “Warranty Deeds”

• •Contain
• a general warranty regarding the deed covenants

• •The
• grantor will defend grantee’s title “against the claims of all persons
• whomsoever”

• •Most
• commonly used in residential real estate sales in Georgia

• Look
• at the sample general warranty deed in your textbook and see if you can find
• the language that makes it a general warranty deed

• •A
• limited warranty deed means the grantor limits the scope of the warranty being
• given regarding defending grantee’s title under the deed covenants

• •Common
• limited warranty deed language “The grantor will defend grantee’s title in the
• property against persons claiming by, through, or under the grantor”

• •In
• Georgia, limited warranty deeds are the most common type of deed used in
• commercial real estate conveyances

• The
• second type of deed available in Georgia is the limited warranty deed. The equivalent to a limited warranty deed in
• some states is called a “special” warranty deed.

• “By,
• through or under the grantor” means people that have claims arising out of the
• time that the grantor owned the property, i.e., under grantor’s watch

• But,
• it doesn’t extend to anyone whose claim arose prior to grantor owning the
• property.

• •Conveys
• whatever title the grantor possesses

• •Does
• not warrant that the title is valid

• •Does
• not offer any deed covenants

• •Consideration
• recital

• •Commonly
• used in gifts, divorce settlements, or
• other intra-family type transfers

• Offers
• a grantee the lowest amount of protection because it offers no warranty as to
• the quality of title. If the grantor has
• faulty title or no title, then the grantee will receive these title defects and
• have no recourse against the grantor. If
• the grantor possesses clear title, then the grantee will receive clear
• title. Apart from the significant lack
• of deed covenants, a quitclaim deed contains largely the same components as the
• general warranty deed and the limited warranty deed.

• A
• second feature that distinguishes quitclaim deeds from other types of deeds is
• the consideration recital. Since many
• quitclaim deeds involve the gifting of property in which money does not change
• hands, the consideration recital will typically say "for
• Love and Affection" instead of a dollar amount.

• Quitclaim
• deeds are also commonly used in divorce settlements where an ex-spouse removes
• himself from title, and in cases where a lien or other interest needs to be
• removed from title, such as when a lender releases its interest in real
• property after a mortgage loan has been satisfied in full.

• Refer
• to the sample quitclaim deed in the exhibit to your textbook. Take a moment to understand the concurrent
• ownership arrangement that results from this quitclaim deed.

•Executor’s Deed

• –conveys title out of the estate of a
• deceased person whose last will and testament was probated

•Administrator's deed

• –conveys title out of the estate of a
• deceased person who did not have a will probated

•Trustee's deed

• –conveys title by a trustee under the
• terms of a trust

•Guardian's deed

–conveys title on behalf of a minor.

•Corrective deed

• –fixes an error in a conveyance in a
• property's chain of title

• In certain situations, a specialized deed
• will be used to transfer ownership of real property. In some of these instances, a court order
• must be obtained granting permission for the conveyance. Other types of special
• purpose deeds will be discussed later in the course.

• •Georgia
• imposes a transfer
• tax on
• most conveyances of real property

• •The
• tax is based upon either the purchase price of the property or the estimated
• fair market value of the property

• •Certain
• types of conveyances are exempt from the payment of transfer tax

• GA
• transfer tax statute is O.C.G.A. § 48-6-1. The statute should be consulted for
• the most current formula for calculating transfer tax.

• Examples
• of exemptions from transfer tax - For example, a gift deed and a deed that is
• granted in the course of a divorce do not require the payment of transfer
• tax. O.C.G.A. § 48-6-2.

• •A
• transfer tax declaration, known as the PT-61 Real Estate Transfer Tax Form,
• must be completed electronically for every transfer of real property in Georgia

• •No
• fee for electronic filing of the PT-61 form

• •A
• hard copy of the completed PT-61 form must also be submitted along with the
• deed to the clerk’s office

• •Even
• if there is no transfer tax due on the transaction, a PT-61 must be submitted
• to notify the taxing authority of the transfer of ownership of the property and
• its exempt status from the payment of transfer taxes.

• •While
• the hard copy of the PT-61 is submitted with the deed, the PT-61 is not
• recorded in the public records.

• The
• PT-61 form may be accessed online and submitted electronically through the
• website for the Georgia Superior Court Clerks Cooperative Authority (which at
• the time of print is www.gsccca.org).
• The clerk’s office will forward the hard copy of the PT-61 to the taxing
• authority.

• •Deed
• must be recorded, or filed, in the public records

• •File
• deed in the county where the real property is located

• •The
• Superior Court Clerk for each county maintains the public records for that
• county

• •The
• fee to record documents in Georgia is standardized across the state and is
• calculated according to the number of pages per document

• •The
• original documents must be sent for recording.
• Photocopies are not acceptable and will be rejected

• •Must
• include a check to cover recording fees

• •The
• check for recording fees may include the total amount of recording fees due for
• all documents that are being recorded in connection with the closing.

• •The
• PT-61 form should not be included in the recording fees calculation, since this
• form is not recorded in the public records.

• •A
• second check must be submitted with the documents made payable to the Georgia
• Department of Revenue to cover any transfer tax due on the transaction.

• •The
• transfer tax and the recording fees may not be combined on one check.

• •Required
• 3-inch margin at the top of the first page of every real estate document
• recorded in the public records

• •If
• a deed is faulty for any reason, in substance or format, the attorney who
• handled the transaction must take corrective measures to fix the error

• After
• the deed of conveyance is executed by the grantor, and witnessed and notarized,
• it should be recorded, or filed, in the public records of the county in which
• the property is located. The legal
• description of the property will indicate the county to which the deed should
• be sent.

• Current
• recording
• fees
• should be confirmed before sending documents for recording in the public
• records.

• A
• check for recording fees should be made payable to the county and must
• accompany the real estate documents to be recorded.

• The
• PT-61 form should not be included in the recording fees calculation, since this
• form is not recorded in the public records.

• As
• mentioned previously, a hard copy of the electronically filed PT-61 form and
• any check for transfer tax should be sent to the clerk’s office, who will
• forward them to the Georgia Department of Revenue.

• Pursuant
• to O.C.G.A. § 15-6-61, a three-inch margin must appear at the top of the first
• page of every real estate record, including deeds, sent for recording.

• In
• the event a real estate record is rejected by the recorder’s office for
• noncompliance with recording rules or procedures, the closing attorney’s office
• must correct the error and re-send the document for recording.

• •Attention
• to detail

•

• •What
• if a mistake is made?

•

• •Methods
• to correct deed errors

• •The
• original deed is re-recorded in the public records

• •Make
• a notation at the top of the deed as to the errors that have been
• corrected

• •If
• the original execution and witnessing of the deed was done properly, there is
• no need for the parties to re-sign the deed

• •Record
• a new, replacement deed in the public records

•

• •A
• corrective deed is signed by the grantor

•

• •States
• the errors being corrected

•

• •References
• the recording information of the original deed

• The
• corrective deed fixes any error made in a previous deed in the property’s chain
• of title

• •A
• sworn statement made under oath to correct non-substantive errors in a deed

•

• •Must
• state the errors being corrected

•

• •Must
• reference the original deed

•

• •Record
• the scrivener's affidavit in the public records

• These
• minor typographical errors made by the attorney in a prior recorded deed did
• not affect the substance or validity of the deed, but nonetheless are errors
• that should be corrected to preserve the integrity of the chain of title to the
• property.

• The
• attorney should use his professional judgment in determining whether a
• scrivener's affidavit is the appropriate corrective measure. A lot of attorneys don’t like to use a
• scrivener’s affidavit, because it’s an admission of a mistake. Although, in reality, any corrective measure
• taken to fix deeds is the result of some type of error, usually made by the
• attorney in the preparation of the deed or the overseeing of signatures on the
• deed.

• Closing
• attorneys must use their judgment when deciding which of the three above
• methods of deed correction is most appropriate in a given situation.

• •To
• keep an accurate record of the real estate transactions within the state

and

• •to
• determine whether third party interests attached to real property prior to or
• after a conveyance of the property to a new owner

• For
• example, recording statutes are used to determine ownership priority between
• two grantees to which the same piece of property has purportedly been conveyed
• by the same grantor.

• •To
• keep an accurate record of the real estate transactions within the state

and

• •to
• determine whether third party interests attached to real property prior to or
• after a conveyance of the property to a new owner

• •race
• statutes

•

• •notice
• statutes (also known as pure notice)

•

• •race-notice
• statutes

• •The
• simplest type of recording statute to grasp

•

• •But,
• the fewest number of states utilize this type of recording statute

•

• •Which
• party wins the “race to the courthouse”?

• •Who
• is the owner of the property?

Answer: Charles



•Why?

• Answer:
• Charles recorded his deed before Betty recorded her deed. Therefore, he “won the race to the
• courthouse.”

• While
• Betty would not own the property, she would have a claim for breach of contract
• against Arlo.

• Note
• that the fact that Charles has no knowledge of the prior transfer to Betty does
• not affect the analysis of who will hold valid title to the property. Even if Charles was aware of Arlo's
• earlier transfer of the property to Betty, by winning the race to the
• courthouse Charles would be deemed to be the owner of the property. If Charles had waited until March 5 to record
• his deed, then Betty would be the owner of the property, since she recorded on
• March 4.

• •Must
• look at the facts and determine which party or parties is a bona
• fide purchasers for value

• •A
• bona fide purchaser for value (BFP) is a party who purchases property in
• good faith and for
• valuable consideration,
• without
• notice of
• any prior claims on the property

• •To
• qualify as a bona fide purchaser, a transferee must not have constructive or
• actual knowledge of any prior transfers.

• Approximately
• 18 states utilize a notice-type recording statute.

• The
• notice statute tends to be the hardest of the 3 types of recording statutes for
• students to grasp

• Under
• a notice statue, to determine the priority of ownership of real property
• purportedly conveyed to two or more grantees by a common grantor, it is
• necessary to determine whether the grantees qualify as bona fide purchasers for
• value.

• In
• notice statute jurisdictions, the most recent transferee who qualifies as a
• bona fide purchaser for value will be deemed to be the owner of the property,
• regardless of when his deed is recorded.

• •In
• a notice recording statute, if there is more than one BFP, the most recent BFP
• is deemed to be the owner of the property

•

• •It
• does not matter when a previous BFP or subsequent BFP recorded his deed

• Whether
• a subsequent transferee has actual knowledge of any prior transfers will be a
• question of fact for the court to decide.
• Whether a subsequent transferee has constructive knowledge of a prior
• transfer will be determined by the date the prior deed was recorded. If a prior transferee recorded his deed
• before the date a subsequent transferee receives his deed, then the subsequent
• transferee would be deemed to have constructive knowledge of the previous deed
• (because the public is charged with constructive knowledge of all publicly
• recorded deeds), and would therefore not qualify as a bona fide purchaser for
• value.

• (1) Did
• the subsequent transferee have constructive knowledge of the prior transfer
• (had the prior deed been recorded at the time the subsequent purchase received
• his deed)?

• (2) Did
• the subsequent transferee have actual knowledge of the prior transfer?

• When
• analyzing a fact scenario in which title to a parcel of property is purported
• to be transferred to two different transferees by a common grantor, under a
• notice statute the two factors to examine are: (factors are listed on the
• slide)

• If
• the answer to either of these questions is "yes," then the second
• transferee will fail to qualify as a bona fide purchaser for value, and
• ownership will vest in the original transferee.
• If the answer to both questions is "no," then the second
• transferee will qualify as a bona fide purchaser for value, and will be deemed
• to have valid title.

• •Who
• is the owner of the property?

• Answer: Charles,
• since

• (1) Charles did not have constructive notice
• of Betty's deed, because it had not been recorded on the date Charles received
• his deed, and

• (2) Charles did not have actual knowledge of Arlo's
• prior transfer to Betty

•Why?

• Answer: Even
• though Betty was also a BFP, Charles is the more recent BFP, and under a notice
• statute, the more recent BFP owns the property

• •The
• Georgia recording statute appears below:

• Every deed conveying lands shall be
• recorded in the office of the clerk of the superior court of the county where
• the land is located. A deed may be
• recorded at any time; but a prior unrecorded deed loses its priority over a
• subsequent recorded deed from the same vendor when the purchaser takes such
• deed without notice of the existence of the prior deed.

O.C.G.A. § 44-2-1

• 1) Did the subsequent transferee have constructive knowledge of
• the prior transfer (had the prior deed
• been recorded at the time the subsequent
• purchase received his deed?

• (2) Did the subsequent transferee have actual
• knowledge of the prior transfer?

(3) Of the bona fide purchasers for value, who was the first to record his or her deed?

• •Who
• is the owner of the property?

• Answer: Charles,
• since

• (1) Charles did not have actual or
• constructive notice of Betty's deed, and

(2) Charles won the race to the courthouse

•Why?

• Answer: Of
• the two BFPs, Charles beat Betty to the courthouse

•A written deed of conveyance accomplishesthe transfer of ownership of real property from a grantor to a grantee. •• Deeds must be recorded in the publicrecords in order to put the public on constructive notice of the deed and toensure the grantee’s ownership rights with regard to the property.

• •Georgia law recognizes several types of
• deeds of conveyance - general warranty deed, limited warranty deed, quitclaim
• deed and other specific-use deeds.

• •The type of deed signed by the grantor
• determines the level of warranty being given with regard to the quality of
• title (as encompassed in the deed covenants) being transferred.

• •In addition to including all of the
• essential components in a written deed of conveyance, proper steps must be
• taken to properly record the deed in the public records and pay any fees
• associated with the recording.

• •Recording deeds in the public records is
• a requirement in Georgia per its Race-Notice statute.

• •You should be able to distinguish between
• the three types of recording statutes and apply them to fact patterns to
• determine which party would own the property.

•“Title" refers to property ownership

• •Encumbrances and governmental interests
• that attach to real property can adversely affect the quality of title

• •Title insurance is a
• type of insurance policy that protects a policyholder against losses resulting
• from defects in title

• •A title insurance company
• issues title insurance policies and defends property owners and lenders against
• adverse third party claims to real property

“Good and Marketable” Title

• •By performing a title
• examination, or
• search, of the real property records for the county in which a parcel of real
• property is located

• •Individuals who perform title searches
• are called title
• examiners

• •A property’s chain
• of title is a
• public record of the history of conveyances between all current and past owners
• of the property

• •Chain of title also reveals how current
• and past owners’ actions have affected the property’s title

• •Title defect -
• the
• absence of something necessary for the total validity of title

• •More serious title defects can delay or
• prevent a real estate transaction from being consummated and are called clouds
• on title

•Examples of clouds on title

• •Actual knowledge -
• matters that we see, learn about or are told about

• •Constructive knowledge -
• matters that by law we are presumed to know.
• In the context of real estate, the public is deemed to have constructive
• knowledge of all matters contained in the public records.

• •Legal
• description

• •Name
• of the current owner (also known as the record title holder)

• •The
• current owner’s and his vesting deed should be the most recent deed in the
• chain of title

• •A full
• title search
• covers the most recent 50 years of a property chain of title; a limited
• title search
• covers fewer years

• •Step
• 1: Tax Assessor's Office

• - information
• on property transfers

• - status
• of real property taxes

Delinquent real property taxes take priority over other encumbrances

• -
• Alphabetical listing of all subdivisions in the county

• - A plat
• is an aerial drawing of the subdivision's roads,
• common areas and individual lots

• - Depicts
• lot sizes and the minimum amount of space
• required to be maintained between buildings
• and property lines

• - Easements
• are sometimes shown

• - Restrictive
• covenants are typically referenced on
• the plat

• The Grantee Index is
• an alphabetical listing of all recipients who have obtained a
• real property interest within a certain time period

• - The Grantor
• Index is
• an alphabetical listing of all persons or entities who have conveyed a
• property interest within a certain time period

• •An alphabetical index by last name (or
• entity name) of all parties who have been granted a real property interest
• during a given time period

• •Work backwards from the present to the
• past

• •An alphabetical index by last name (or
• entity name) of all parties who have granted a real property interest during a
• given time period

• •Title examiner works his way forward in
• time through the Grantor Index from the past to the present

• •Every day, the clerk’s office will post
• an effective
• date to
• notify the public of the day through which real estate records have been
• recorded

• •To cover the gap in time between the
• effective date and the current date, the title examiner will return to the deed
• room to update the title search as close to the closing date as possible

• • The updating process is sometimes
• referred to as a “date down”

•Lien Books


•Uniform Commercial Code (UCC) Index


•Lis Pendens


•Probate Court Records

• •Title examiner will prepare a title
• report, or
• a title abstract, to summarize the results of the title exam

• In
• some instances, a closing attorney will be asked by the title insurance company
• or the borrower's lender to issue` a title opinion
• letter, which is the attorney's professional judgment as to the status of the
• title

• •A
• document that sets forth the terms under which a title insurance company will
• issue title insurance on real property

• •The
• format of title commitments is created by the American Land Title Association
• (ALTA)

• •In
• residential real estate, the closing attorney handling the purchase and sale or
• refinance will typically prepare the title commitment

• •The
• closing attorney acts as an agent for the title insurance company

• •Attorneys
• frequently delegate to a paralegal the task of preparing a title commitment

• •Commitments
• are generated on the computer using software provided by the title company

• General
• Information:
• Title commitments contain general language applicable to all properties

• Property-Specific
• Information:
• The results of a title examination are used to ascertain:

–Chain of title information

–Encumbrances

–Clouds on Title

• •Tax Records
• - Need to ascertain the status of real property
• taxes for the parcel

•Survey (mostly in commercial real estate)

•Affidavits

• - Sworn
• statement made under oath by the current property owner about items that could
• adversely affect the property's title

• •Owner’s
• Commitment

-for the property owner

• •Loan
• Commitment (lender’s commitment)

-protects a lender

• •An
• owner’s and lender’s commitment may be generated, instead of two separate
• commitments

• •Schedule
• A (general information)

• •Schedule
• B-1 (requirements)

• •Schedule
• B-2 (exceptions to coverage)

• •Type
• of title insurance policy to be issued

• •Name
• of the proposed insured (owner and/or lender)

• •Monetary
• amount of coverage (purchase price or loan amount)

• •Effective
• date of the commitment (date of the title exam)

• •Lists
• items that must be fulfilled or resolved for the title policy to be issued

• •Example
• – the proposed insured (i.e., the buyer) must actually buy the property

• •Example
• – taxes must be paid and other clouds on title must be removed

• •These
• issues must be resolved prior to or at closing

• •Items
• that are specifically exclude from coverage

• •If
• there is a problem with title that originates from one of these exceptions to
• coverage, the title insurance company will deny coverage under the title
• insurance policy

• •Gap
• exception

• •Survey
• exception

• •Loan
• exception

• •Known
• encumbrances

• •Endorsements can
• be purchased at additional cost to provide expanded coverage under a title
• policy

• •Provides coverage in the event title to a
• piece of real estate must be defended against an adverse claimant

• •Physical damage to property is not
• covered

•Not recorded in public records

• •Does not guarantee that the policy holder
• will not lose the property

• •Pays to defend the policy holder’s
• interest in the property and reimburses the property owner if the property is
• lost or for other financial losses as a result of the adverse claim

•Mistakes made by the title examiner

• •Mistakes made by the clerk’s office when
• indexing real estate records

•Fraud, forgery

•Missing heirs

• •The deed covenants in a warranty deed
• made by a seller might not offer
• adequate protection

• •Owner’s policy -
• insures the owner of the property for monetary losses up to the owner's equity
• in the home, plus expenses incurred in the process of defending title. Protects
• the policyholder and his devisees and heirs for so long as an interest is
• retained in the property

• •Loan policy -
• insures the lender while the loan is outstanding. Coverage amount decreases as the amount of
• outstanding loan decreases

•No statewide set rate in Georgia

•Range of $1 - $3 per $1,000 of coverage

• •Simultaneous issue –
• Can reduce costs if an owner’s policy and loan policy are generated at the same
• time

•“Backwards looking”

• –insures
• against title defects that were created prior to the issuance of the title
• policy and whose existence becomes known after the closing

• –Differs
• from other types of insurance that are “forward looking” and cover events that
• happen after the issuance of the policy

•Defects, Liens and Encumbrances


•Marketable Title


•Access to a Public Road


•Lender’s Priority Interest

•Zoning and Other Governmental Regulations

•Eminent Domain

•Known Unrecorded Title Defects

•Matters Resulting in No Loss

•Title Defects Created After Closing

•Environmental Matters

• •Owner’s policy -
• not transferable to a subsequent purchaser of the real property

• •Loan policy
• - transferable if the original lender
• sells its loan to another lender on the secondary loan market. The loan
• policy is tied to the loan, not the lender.

• •Notify
• title insurance company of challenge to title

• •If
• title insurance company agrees it’s a covered risk, the company will handle
• negotiations and pay the policyholder (up to the policy amount) for financial
• losses

• •If a
• lawsuit is brought by a third party against the policyholder, the title
• insurance company will provide the policyholder’s defense.

• •A property’s chain of title reveals
• current and past owners of the property and encumbrances that affect the
• property

• •Results of a title search are compiled
• into a title report, which is used to prepare a commitment for title insurance

• •Clear title (good and marketable title)
• is title that a reputable title insurance company is willing to insure

•Any Schedule B-2 requirements should be resolved prior to or at the closing

• •A title insurance policy protects the
• insured against many, but not all, types of title defects

• •Loan policies protect the lender’s
• interest in the real estate, while owner’s policies protect the owner’s
• interest in the real estate

• •A
• property’s legal
• description is
• an exact description of the location and boundaries of a parcel of
• property

• •A
• legal description encompasses more than just the property’s street
• address

• •Many
• real estate documents are required to include a legal description

• •Short
• legals
• (used for subdivided property in Georgia and some other states)

• •Long
• legals,
• i.e., metes and bounds legals
• (used for non-subdivided property in Georgia and some other states)

• •Government
• Rectangular Survey descriptions (not used in Georgia)

• •Used
• to legally describe property located within a recorded subdivision

• •Short
• legal descriptions are usually brief

•Sample short legal description:

• ALL THAT TRACT OR PARCEL OF LAND lying
• and being in Land Lot 60 of the 16th District, Cobb County, Georgia, being Lot
• 7, Block E, Phase II, of Plumeria
• Heights Subdivision, as per plat recorded in Plat Book 17, Page 128, of the
• Cobb County, Georgia records.

• •Also
• known as “metes and bounds” legal descriptions

• •The
• property is not subdivided, so every boundary line must be described

• •Surveys
• are used as the basis for a long legal description

• •A
• survey is
• an aerial-view drawing of real property

• •Boundary survey -
• depicts a property’s boundaries and topographical characteristics

• •As-built survey -
• more detailed and depicts the location of any natural and man-made structures
• or easements located on the property

• •ALTA/ACSM survey standards -
• surveys should be prepared accoring to these

• Part
• 1 –
• Describes the general location of the property by reference to a land lot,
• district, section, if applicable, and county (this is the same first step in a
• short legal description).

• Part
• 2 -
• Describes the location of the Point of Beginning (“POB”), which is located
• somewhere on the property and serves as the starting place for the outline of
• the property’s boundary lines. Surveyors
• use a variety of methods to ascertain a property’s POB.

• Part
• 3 -
• Traces around the boundary of the property, starting and ending at the
• "POB." As with a short legal
• description, you might also include the property's street address.

• Part
• 4 -
• References the survey that was used to prepare the long legal, and sometimes
• also gives the total acreage of the property.

• •Each
• boundary line depicted on the survey will be described in the long legal by a call
• which includes the course, or direction, of the line, and the distance, or
• length, of that line.

• •Sample
• call: “Thence run North 52°72’21” West a distance of 34.23 feet to an iron
• pin.”

• ALL
• THAT TRACT OR PARCEL OF LAND lying and being in Land Lot 107, 17th District, Fulton County, Georgia, being
• more particularly described as follows:
• COMMENCE at the point of intersection of the northerly right-of-way line
• of 14th Street (variable right-of-way width) and
• the westerly right-of-way line of Fowler Street (40 foot right-of-way width);
• thence run northerly along and coincident with the westerly right-of-way line
• of Fowler Street, a distance of 269.00 feet to an iron pin set, said pin being
• the TRUE POINT OF BEGINNING;

• FROM
• THE TRUE POINT OF BEGINNING AS THUS ESTABLISHED, thence leave the westerly
• right-of-way line of Fowler Street and run North 89°37'13" West, a
• distance of 120.47 feet to a 1" solid pipe found; thence run North
• 01°21'38" West, a distance of 49.36 feet to a 1/2" rebar found;
• thence run North 89°59'38" East, a distance of 121.84 feet to a 1/2"
• rebar found on the westerly right-of-way line of Fowler Street; thence run
• along and coincident with the westerly right-of-way line of Fowler Street South
• 00°13'49" West, a distance of 50.16 feet to an iron pin set, said pin
• being the TRUE POINT OF BEGINNING. The
• said property is also known as 1200 Fowler Street, Atlanta, Georgia, per the current
• system of numbering houses in Fulton County, Georgia. Said legal description having been prepared
• according to the survey of the 0.138 acre property by Surveyor Specialists,
• dated November 25, 1999.

• •Based
• upon the U.S. Public Land Survey System

• •Divides
• land into a series of rectangles by using intersecting hypothetical lines

• •Further
• divides areas into sections, townships, and ranges

• •Example:
• “The southeast quarter of the northeast quarter of Section 32, Township 1
• North, Range 65 West of the Seventh Principal Meridian”

• •Execution - describes
• the act of signing documents

• •Signature blocks - the
• area of the document where the parties’ signatures appear

• •Witness/Unofficial Witness -
• someone who attests that the signatures on a document are authentic

• •Notary public (an
• “official witness”) – someone who attests under oath that the signatures on a
• document are authentic

• IN
• WITNESS WHEREOF, the undersigned has hereunto set hand and seal the day and
• year first above written.

• Signed,
• sealed and delivered
• in the presence of:

• ______________ _____________(SEAL)
• Witness Sally Seller

• ______________
• Notary Public

• IN
• WITNESS WHEREOF, the undersigned has hereunto set hand and seal the day and
• year first above written.

• Signed,
• sealed and delivered
• in the presence of: Big Country, Inc., a Delaware
• corporation
• ______________ By:_____________(SEAL)
• Witness Betsy Briggs, President

• ______________ Attest:
• _____________(SEAL)
• Notary Public Bo Smith, Secretary

[Corporate Seal]

• IN
• WITNESS WHEREOF, the undersigned has hereunto set hand and seal the day and
• year first above written.

• Signed,
• sealed and delivered
• in the presence of: Big Country, L.L.C., a GA
• limited liability company
• ______________ By:_____________(SEAL)
• Witness Name: Jon Madison
• Title: Manager ______________
• Notary Public

• IN
• WITNESS WHEREOF, the undersigned has hereunto set hand and seal the day and
• year first above written.

• Signed,
• sealed and delivered
• in the presence of: Big Country, LP, a Delaware
• limited partnership
• ______________ By:_____________(SEAL)
• Witness Briggs Madison

• General Partner
• ______________ By: _____________(SEAL)
• Notary Public Shawna Glee-Thomas

General Partner

• •A
• business entity is a legal "person" that has an identity separate and
• apart from its owners

• •All
• business entities exist through statute

• •Business
• entities may enter into contracts to buy, sell and lease personal and real
• property, and they may sue or be sued in their own name

•Corporations

•limited liability companies

•limited partnerships

• •While it is much less likely, you may
• also encounter general partnerships or sole proprietorships

• •A corporation is a
• legal entity that may issue stock and is owned by its shareholders

• •Formed by filing Articles
• of Incorporation
• with the Secretary of State and taking other organizational actions required by
• state law

• •Bylaws not
• filed and govern the corporation’s management and operations. Bylaws are not filed with the Secretary of
• State

• •A corporation is a
• legal entity that may issue stock and is owned by its shareholders

• •Formed by filing Articles
• of Incorporation
• with the Secretary of State and taking other organizational actions required by
• state law

• •Bylaws not
• filed and govern the corporation’s management and operations. Bylaws are not filed with the Secretary of
• State

• •A limited
• liability company
• is a business entity that is owned by its members, whose liability to the
• entity is limited to the amount of their capital investment in the LLC

• •Typically
• abbreviated "LLC" or "L.L.C.“

• •File Articles
• of Organization
• with the Secretary of State

• •Operating
• agreement not
• filed and governs the management and operation of the entity

• •A partnership is
• the association of two or more individuals or business entities who jointly own
• and carry on a business for profit

• •A Partnership Agreement governs
• the management and operation of the entity

• •Each partner controls and manages the
• business and assumes personal liability for its debts and actions

• •A sole proprietorship is
• essentially a general partnership comprised of only one person who controls the
• business and assumes personal liability for its debts and actions

• •A very popular alternative to a basic
• general partnership

• •Typically abbreviated "LLP,"
• "L.L.P.," or "Ltd."

• •All of the partners control the business
• without assuming risk of personal liability for its debts and actions

• •Form by filing an Election
• of Limited Liability Partnership with the Clerk of Superior Court of any
• county in which the partnership has an office

• •In a limited partnership,
• there are one or more general partners, and the other partners are limited
• partners

• •Typically abbreviated "LP" or
• L.P.“

• •Formed by filing a Certificate
• of Limited Partnership
• with the Secretary of State

• •Partnership Agreement not
• filed and governs the management and operation of the entity

• •General partners run the business and are
• personally liable for debt

• •Limited partners are “silent” partners
• whose exposure is limited to their capital investment

• •Georgia also recognizes an entity known
• as a limited
• liability limited partnership (typically abbreviated "LLLP"
• or "L.L.L.P."), in which the general partners are not personally
• liable for the debts and obligations of the entity

• •The Secretary of State (or
• its equivalent office) for each state serves as custodian of corporate
• records

• •All businesses (except general
• partnerships and sole proprietorships) must
• file with the Secretary of State in order to be recognized as a valid
• entity

• •To remain in good
• standing, the
• business entity must pay annual fees to the state to keep its registration
• current

• •If an entity conducts business in any
• state other than the state of its formation, the entity must also be registered
• as a foreign
• entity in
• that state

• •A
• person has legal
• authority to
• bind a business entity when that person has been properly authorized in
• accordance with the terms of the entity’s organizational documents

• •If a
• person lacks legal authority to bind an
• entity, then any contract, deed or other document signed by that person
• will not be legally enforceable against the entity

• (1) Ascertain the proper name of the
• business entity

•Corporation: Look at the Articles of Incorporation

•LLC: Look at the Articles of Organization

• •LLP: Look at the Election of Limited Liability
• Partnership contains the proper name of an LLP.

• •Limited
• Partnership (LP or LLLP):
• Look at the Certificate of Limited Partnership

• (2) Confirm the entity is in good
• standing

• •Corporation,
• LLC and Limited Partnership (LP or LLLP):
• Request
• a good standing certificate from the Secretary of State

• •LLP: LLPs do not have ongoing registration
• fees with the Clerk of Superior Court in order to remain in good standing. Therefore, for a domestic (i.e.,
• Georgia-formed LLP), there is no good standing certificate to obtain. However, if a foreign LLP is transacting
• business in Georgia, that entity is required under Georgia law to register with
• the Secretary of State of Georgia to obtain a certificate of authority to
• transact business in Georgia

• (3) Determine who has the legal
• authority to sign documents on behalf of the business entity

• •Corporation:
• Check the bylaws or the minutes from a Board
• of Directors meeting

•LLC: Check the operating agreement

• •LLP,
• LP, or LLLP:
• Check the partnership agreement

• •Corporation: President, chief executive officer or
• vice-president solely or in conjunction with one or more other officers, such
• as a secretary or treasurer

• •LLC: One
• or more managers of the LLC

• •LLP,
• LP, or LLLP:
• One or more partners in an LLP, or one or more general partners in an LP
• or an LLLP