Title, Ownership and Encumbrances
What this domain tests
This domain tests how title is held, transferred, and encumbered. Expect questions on forms of ownership, registration systems, encumbrances, title insurance, and the effect of unregistered interests.
Core rules and concepts
- Forms of ownership: sole ownership, joint tenancy (right of survivorship), and tenancy in common (distinct shares, no survivorship). Matrimonial or family law can override the registered form on relationship breakdown.
- Registration systems: land titles (title by registration, indefeasibility) vs. registry (title by chain of deeds). In land titles, the registered owner's title is generally conclusive subject to stated exceptions.
- Encumbrances: mortgages, liens, easements, rights-of-way, restrictive covenants, and encroachments. Some run with the land and bind subsequent owners.
- Easements and covenants must be reviewed for scope; a covenant may restrict use, additions, or home-based business.
- Title insurance protects against certain defects and fraud; it does not replace a survey or cure a known defect.
- Unregistered interests (leases over a stated term, options, agreements of purchase and sale) may be vulnerable unless protected by registration or statute.
Worked example
A buyer purchases a home registered in joint tenancy by a married couple. One spouse dies before closing.
Reasoning: on the death of a joint tenant, the right of survivorship passes the deceased's interest to the surviving joint tenant, so the survivor holds the whole title. The estate does not retain a half interest unless the joint tenancy was severed (e.g., by registration of a transfer or agreement). The salesperson should confirm with the lawyer that title is still in the survivor's name and that the transfer can proceed. The mark is lost by assuming the estate must consent.
Traps that cost marks
- Confusing joint tenancy (survivorship) with tenancy in common (no survivorship).
- Assuming registered title is immune to all claims - statutory exceptions exist.
- Treating title insurance as a substitute for a survey or for disclosing a known defect.
- Ignoring restrictive covenants that limit use or additions.
- Forgetting that unregistered leases or options may not bind a purchaser.