1. Chapter 6

2. Georgia Real Estate An Introduction to the Profession Eighth Edition
Chapter 6
Recordation, Abstracts and
Title Insurance

3. Key Terms abstract of title acknowledgment actual notice
chain of title
constructive notice
inquiry notice
marketable title
public recorder’s office
quiet title suit
title insurance
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4. Constructive Notice
There are two ways a person can give notice of a claim or right to land:
One is by recording documents in the public record.
The other is by visibly occupying or otherwise making use of the land.
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5. Constructive Notice
Constructive notice is the knowledge that is available by making a diligent search. By recording documents at the county courthouse, a person with rights to the property provides constructive notice to the world of their interest.
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6. Inquiry Notice
A person interested in a property is held to be responsible for making further inquiry of anyone giving visible or recorded notice. Ignorance is not a legal defense.
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7. Actual Notice
Actual notice is knowledge that one has gained based on what one has seen, heard, read or observed. If you go to the property and see someone in possession, you have actual notice of that person’s claim to be there.
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8. Recording Acts
Each county has a public recorder’s office. Each public recorder’s office will record documents submitted to it that pertain to real property in that county.
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9. Recording Acts
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10. Recording Acts
If it is not recorded, a deed, mortgage or other instrument affecting real estate is not effective as far as subsequent purchasers and lenders are concerned.
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11. Recording Acts
Prospective purchasers, lenders and the public are presumed notified when a document is recorded.
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12. Unrecorded Interests
Lesser rights are rarely recorded. Month-to-month rentals and leases for a year or less would probably not be recorded.
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13. Summary
If you are a prospective purchaser, you are presumed by law to have inspected both the land itself and the public records to determine the present rights and interests of others. If you receive a deed or mortgage, record it immediately in the county in which the land is located.
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14. Requirements for Recording
All states require that a document be acknowledged before it is eligible to be recorded. This is done to reduce the possibility that forged or fraudulently induced documents will enter the public records.
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15. Witnesses
The person executing the document signs in the presence of at least two witnesses.
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16. Acknowledgment
An acknowledgment is a formal declaration by a person signing a document that he did, in fact, sign the document.
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17. Public Records Organization
Each document brought to a public recorder’s office is copied and then returned to its owner. The copy is placed in chronological order with copies of other documents. These are stamped with consecutive page numbers and bound into a book.
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18. Public Records Organization
Filing incoming documents in chronological order is necessary to establish the chronological priority of documents. Recording offices have developed systems of indexing.
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19. Tract Index
The tract index is the simplest to use. One page is allocated to either a single parcel of land or to a group of parcels, called a tract. On that page, you will find all recorded deeds and mortgages related to that parcel, along with the book and page where the copy of the document can be found.
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20. Grantor and Grantee Index
The grantor index lists in alphabetical order all the grantors named in the documents recorded that year. The grantee index is arranged by the grantee name.
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21. Chain of Title
A chain of title shows the linkage of property ownership that connects the present owner to the original source of title. In Georgia, a 50-year title search is considered to be sufficient.
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22. Chain of Title
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23. Chain of Title
The chain must be complete from the original source of the title to the present owner. If there is a missing link, the current “owner” does not have valid title to the property.
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24. Chain of Title
A search must be made for grantors, grantees, outstanding mortgages, judgments, actions pending, liens and unpaid taxes that may affect the title.
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25. Chain of Title
There may be lawsuits pending that might later affect title. This information is found on the lis pendens index at the county clerk’s office. Lis pendens means pending lawsuits.
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26. Abstract of Title
Full-scale title searching should be left to professionals. An abstract of title is a complete historical summary of all recorded documents affecting the title of a property.
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27. Abstract of Title
The abstract is sent to an attorney who renders an opinion of title as to who the fee owner is, and names anyone else with a legitimate right or interest to the property. This opinion is known as a certificate of title.
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28. “What Ifs”
There is no guarantee that the abstract, or its certification, is completely accurate. What if a recorded deed is a forgery? What if a deed was executed by a minor? What if a deed contained an erroneous land description?
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29. “What Ifs”
The recorder’s office is responsible only for verifying that is shows an acceptable acknowledgment. The recorder’s office is not responsible for verifying the contents of a deed.
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30. Title Insurance
Title insurance is available to anyone wishing to purchase it. It is the custom to purchase it from a title company that combines the search and policy in one fee.
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31. Title Commitment
A title company first examines the public records. An attorney reviews the findings and renders an opinion. This information becomes the title commitment.
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32. Title Commitment
A title commitment is a snapshot that shows the condition of title at a specific moment in time. It only tells who the current owner is. It does not list all mortgage loans ever made, but only those that have not been removed.
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33. Title Commitment
The buyer is responsible for making the on-site inspection and for hiring a surveyor the boundaries are uncertain. It is also the buyer’s responsibility to check the zoning of the land.
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34. Title Commitment
Title insurance may be purchased at any time, it is most often purchased when real estate is originally bought.
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35. Policy Premium
In Georgia, the cost of title insurance to protect the lender is included in the lender’s quoted closing costs. Title insurance to protect the buyer is available.
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36. Policy Premium
The buyer will obtain an insurance policy protecting their interest in an amount equal to the purchase price. This insurance remains effective as long as the buyer or heirs have an interest in the property.
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37. Policy Premium
The premium is a single payment. Each time the property is sold, a new policy must be purchased. The old policy cannot be assigned to the new owner.
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38. Lender’s Policy
Lender’s title policy gives title protection to a lender who has taken real estate as collateral for a loan. The lender’s policy only protects the amount owed on the mortgage. The coverage on the policy declines and terminates when the loan is fully repaid.
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39. Lender’s Policy
The lender’s policy is assignable to subsequent holders of that same loan. The owner’s policy is not. When a owner’s and lender’s policy are purchased at the same time, the combined cost is only slightly more than a single policy.
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40. Claims for Losses
When an insured defect arises, the title insurance company reserves the right to either pay the loss or fight the claim in court.
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41. Claims for Losses
Title insurance protects against something that has already happened but has not been discovered.
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42. The Growth of Title Insurance
A warranty deed places a great obligation on the grantor. By purchasing title insurance, the grantor can transfer that obligation to an insurance company.
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43. The Growth of Title Insurance
The use of title insurance has made mortgage lending more attractive and lending a little easier. Lenders can charge a lower rate of interest.
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44. The Growth of Title Insurance
In nearly all real estate transactions, the seller agrees to deliver marketable title to the buyer. Marketable title is title that is reasonably free of litigation. If a discovered defect is not serious, the insurance company will accept the risk.
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45. Quiet Title Suit
When a title defect, also called a cloud on the title, must be removed, it is logical to remove it by using the path of least resistance.
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46. Quiet Title Suit
A quiet title suit permits a property owner to ask the courts to hold hearings on the ownership of land.
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47. Quiet Title Suit
Anyone claiming to have an interest or right to the land in question may present verbal or written evidence of that claim.
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48. Quiet Title Suit
A judge rules on the validity of each claim. The result is to recognize those with a genuine right and to “quiet” those without a genuine interest.
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49. Marketable Title Acts
A marketable title act is legislation aimed at making abstracts easier to prepare and less prone to error. This is done by cutting off claims to rights or interests in land that have been inactive for longer than the act’s statutory period.
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50. Marketable Title Acts
A full title search in Georgia is considered to be 50 years. People have 50 years to come forward and make their claim known.
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51. Marketable Title Acts
Marketable title acts do not eliminate the need for legal notice, nor do they eliminate the role of adverse possession.
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