Chapter 3 Income Taxation and Transfer of Title
12 1/2 %
20%
25%
28%
Longitude and latitude
Only the approximate location
The location of improvements, easements and encroachments
That it is a true copy of a prior physical survey
Defects that would be revealed by a correct survey
Rights of parties in possession
Zoning restrictions
Incompetent grantors
Dedication
Escheat
Police power
Eminent domain
A tax loss of $17,900
A tax loss of $35,100
A tax loss of $47,900
No loss for tax purposes
The grantor promises to indemnify the grantee for any loss suffered because of failure of title
The grantor warrants the property is free of liens and encumbrances other than those stated in the deed
The grantor warrants he or she has rightful ownership
If any further instrument or act is needed to perfect title, the grantor promises to provide it.
Invested in long term, fixed income investments
Purchased property without the use of leverage
Purchased property using moderate leverage
Purchased property using a high degree of leverage
$0
$12,500
$25,000
$50,000
Both parties will pay tax because the trade was not like for like
J will be taxed on $10,000
K will be taxed $10,000
The trade would defer all taxes
Execution
Ratification
Verification
Habendum
The exercise of police power
Eminent domain
Statutory dedication
Inverse condemnation
Nothing
$700,000
$1,200,000
$1,900,000
Tacking on
Continued open notorious and hostile use
A quiet title action
Inverse condemnation
Eminent domain
Inverse condemnation
Exercise of police power
Statutory dedication
H would have greater right than a later purchaser from G who records first
If G later gave a gift deed to J, J's rights would be greater than H's rights
The deed would be void
Between G and H, H has good title
Policy of title insurance
Condensation of every recorded document dealing with the property
Opinion of title
Commitment to issue a title policy
Safety clause
Habendum clause
Execution clause
Description clause
K because K was the first purchaser
M because M was the first to record
K, L, and M take equal shares as a matter of equity
J retains title because J's fraud cannot pass title
J would have a loss of $33,000
J would have a gain of $48,000
J would have a gain of $81,000
J would have a gain of $128,000
Cash flow
Equity
Arbitrage
Liquidity
Loan will increase her tax liability in the event of a sale
Interest payments on the home equity loan may be tax deductible
Cost basis of the home will be increased by $80,000
$80,000 in proceeds is subject to regular income taxation
Borrowed
Leveraged
Equity
Capital
15 years
27.5 years
31 years
39 years
A minor
A foreign owner
The government
A person declared to be incompetent
Has not made any undisclosed transfer of title or encumbrance
Will guarantee that there are no undisclosed liens
Will make good any loss suffered by the grantee because of title defects
Will provide any further instrument or act needed to perfect title
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