A claim to property based on a document that appears valid but is actually defective, relevant to adverse possession.
Why Color of Title matters on the exam
This term belongs to Transfer of Title. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Color of Title
Every Freehold question shows why the right answer is right — and cites its source.
Which factor most directly affects whether a lender may pursue a deficiency judgment after foreclosure?
The borrower's marital status at the time the loan was originated
The color of title conveyed by the deed in the original purchase
The number of previous owners appearing in the chain of title
Whether the loan is non-recourse or state law restricts deficiency judgments
Show answer & explanation
Whether the loan is non-recourse or state law restricts deficiency judgments — Some loans are non-recourse, and some states limit or bar deficiency judgments, especially after non-judicial foreclosure, so the ability to collect a deficiency depends on the loan type and applicable state law.
Source: PSI National Real Estate Exam Content Outline §4 Financing
Possessing land under 'color of title' means the claimant:
Has actual valid legal title to the property, recorded and free of any defect in the chain of title
Has no documentation of any kind supporting the claimed occupancy of the parcel in question
Occupies the land based on a written document that appears to convey title but is legally defective
Is a licensed title insurance agent authorized to issue policies in that state
Show answer & explanation
Occupies the land based on a written document that appears to convey title but is legally defective — Color of title exists when a claimant possesses land under a document, such as a deed, that purports to convey title but is defective for some reason, which can support and sometimes strengthen an adverse possession claim.
Source: PSI National Real Estate Exam Content Outline §9 Transfer of Title
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