California Real Estate Practice Exam

According to the text, a corporation issued a deed to real property signed by the president and secretary with the corporate seal. Under what condition would this deed likely pass marketable title?

1. all of the assets of the corporation are included in the transfer

2. the deed is executed in connection with the dissolution of the corporation

3. the transaction involved is within the ordinary scope of business of the corporation

4. the transferor is a religious organization or church

The correct answer is: all of the assets of the corporation are included in the transfer

The condition under which the deed likely passes marketable title is when all of the assets of the corporation are included in the transfer. This is significant because, generally, for a deed to be valid and marketable, it should convey good title to the property being transferred without any legal complications. When all assets are included, it indicates that the corporation is effectively covering its obligations and liabilities, which can provide assurance to the buyer regarding the title's marketability. This context is important as it shows that the buyer can have confidence in the ownership and financial integrity of the transfer since the corporation is not leaving behind any potential claims or liabilities that could arise from assets not included in the transfer. While the execution of the deed may be tied to a dissolution of the corporation, within the ordinary scope of business, or involve a religious organization, those conditions alone do not guarantee that the title conveyed is free from defects or claims. Only the comprehensive transfer of all assets ensures that there are no undisclosed interests that may complicate the title later, which solidifies the marketability of the title in the eyes of potential buyers.