Podcast
Questions and Answers
What is the primary purpose of title insurance?
What is the primary purpose of title insurance?
- To guarantee the property will appreciate in value
- To insure against fire damage to a property
- To provide coverage for property tax liabilities
- To protect buyers and lenders against ownership disputes (correct)
Which of the following situations can create a claim against a property's title?
Which of the following situations can create a claim against a property's title?
- The property is located in a high-value area
- The owner decided to renovate the property
- The property was recently appraised
- The property has a dispute over its inheritance (correct)
What are the two types of title insurance policies mentioned?
What are the two types of title insurance policies mentioned?
- Owner and lender policies (correct)
- Estate and mortgage policies
- Contract and collateral policies
- Public and private policies
Who is responsible for resolving any title problems before the sale of a property?
Who is responsible for resolving any title problems before the sale of a property?
What does a title company do before issuing title insurance?
What does a title company do before issuing title insurance?
Which policy is typically required if a mortgage is taken out on a property?
Which policy is typically required if a mortgage is taken out on a property?
What is often negotiable during the sales contract regarding title insurance?
What is often negotiable during the sales contract regarding title insurance?
What does a preliminary title report indicate?
What does a preliminary title report indicate?
Who typically pays for the owner's title insurance policy?
Who typically pays for the owner's title insurance policy?
What does title insurance primarily protect against?
What does title insurance primarily protect against?
What type of title insurance covers the lender's interests?
What type of title insurance covers the lender's interests?
How is the cost of title insurance generally determined?
How is the cost of title insurance generally determined?
What is a key difference between title insurance and other types of insurance?
What is a key difference between title insurance and other types of insurance?
What does the owner's title insurance policy cover?
What does the owner's title insurance policy cover?
What is the cost structure of title insurance?
What is the cost structure of title insurance?
Which of the following is NOT covered by owner’s title insurance?
Which of the following is NOT covered by owner’s title insurance?
Which situation could be a reason to file a claim against title insurance?
Which situation could be a reason to file a claim against title insurance?
Which of these situations is typically addressed by lender's title insurance?
Which of these situations is typically addressed by lender's title insurance?
What must be resolved before a title company will issue a final title report?
What must be resolved before a title company will issue a final title report?
Which type of title insurance protects a buyer's investment in a property?
Which type of title insurance protects a buyer's investment in a property?
If a seller has a lien for unpaid property taxes, what is the seller's responsibility before the sale?
If a seller has a lien for unpaid property taxes, what is the seller's responsibility before the sale?
What is an exclusion in the context of title insurance?
What is an exclusion in the context of title insurance?
What effect does having a mortgage on a property have concerning title insurance?
What effect does having a mortgage on a property have concerning title insurance?
What can happen if a property buyer chooses not to purchase title insurance?
What can happen if a property buyer chooses not to purchase title insurance?
In what scenario might title insurance not be necessary?
In what scenario might title insurance not be necessary?
What does a title company review when performing a title search?
What does a title company review when performing a title search?
Which of the following best describes the coverage of owner’s title insurance?
Which of the following best describes the coverage of owner’s title insurance?
What is one specific risk that owner’s title insurance covers?
What is one specific risk that owner’s title insurance covers?
How is lender's title insurance primarily beneficial to lenders?
How is lender's title insurance primarily beneficial to lenders?
What is a characteristic difference between owner’s title insurance and other types of insurance?
What is a characteristic difference between owner’s title insurance and other types of insurance?
Which factor does NOT generally influence the cost of title insurance?
Which factor does NOT generally influence the cost of title insurance?
What type of claim would NOT typically be protected by title insurance?
What type of claim would NOT typically be protected by title insurance?
What is usually required of borrowers regarding lender's title insurance?
What is usually required of borrowers regarding lender's title insurance?
How are title issues typically discovered prior to the purchase of a property?
How are title issues typically discovered prior to the purchase of a property?
What does the one-time premium for title insurance typically relate to?
What does the one-time premium for title insurance typically relate to?
Which of the following is NOT a function of title insurance?
Which of the following is NOT a function of title insurance?
Study Notes
What is Title Insurance?
- Title insurance protects property buyers and lenders from financial loss and legal expenses if there are title defects.
- It differs from other types of insurance by focusing on risk prevention, not risk assumption.
- Title insurance is a one-time premium paid at closing, with no monthly payments.
- Title examiners review property history to eliminate title problems before purchase.
Types of Title Insurance
- Buyer's Policy (Owner's Policy): Protects the buyer's investment in the property.
- Lender's Policy: Protects the lender's interest in the property and is typically required by lenders.
How Title Insurance Works
- A title company performs a title search covering public records related to the property.
- This search identifies potential title problems, such as liens, judgments, and previous deeds.
- A preliminary title report is issued, which lists any problems that need resolution before closing.
- The seller is responsible for resolving any title problems found.
- Escrow agent works with the title insurer to secure a policy.
Title Insurance Coverage
- Covers existing title defects that were unknown at the time of purchase but become apparent later.
- Protects against legal claims from previous owners or others who claim ownership.
- Covers legal expenses associated with defending a claim against the property.
- Common Covered Risks: Forged documents, property line disputes, unsettled liens, building code violations, errors in public records.
Cost of Title Insurance
- Cost is dependent on the state, insurance provider, and purchase price of the home.
- Usually included in closing costs.
Benefits of Title Insurance
- Safety net for your largest investment: Protect your home, your biggest investment.
- Peace of mind: The title company will back you up if a covered title issue arises.
- Protection against hidden title defects: Covers risks even after thorough record searches.
Examples of Covered Title Defects:
- Improperly executed documents.
- Mistakes in recording legal documents.
- Forgeries and fraud.
- Undisclosed heirs.
- Unpaid taxes and assessments.
- Unpaid judgments and liens.
- Unreleased mortgages.
- Mental incompetence of property grantors.
- Impersonation of true property owners.
- Title issues causing buyers to refuse purchase.
Title Insurance
- Title insurance protects buyers and lenders from financial losses due to title issues, ensuring clear ownership of real estate.
- Title issues can arise from disputes over ownership, liens, inheritance, or co-ownership disagreements.
- Title insurance covers losses and legal fees related to title problems.
Types of Title Insurance
- Buyer's Policy (Owner's Policy): Protects the buyer's investment in the property.
- Lender's Policy: Protects the lender's interest in the property, typically required for mortgage borrowers.
Title Search and Process
- A title company searches public records to verify ownership history and potential problems.
- A preliminary title report outlines any issues that need resolution before closing.
- The seller is responsible for resolving any title problems before the sale.
- The choice of title company is negotiable between the buyer and seller.
Coverage
- Title insurance protects against existing title defects, not new problems arising after the policy is issued.
- Title defects: Unknown ownership issues that surface after purchase.
- Legal claims: Claims against the property from previous owners or others.
- Defense costs: Coverage for legal fees in defending against property claims.
Who Pays for Title Insurance?
- Typically, the buyer pays for the lender's policy, and the seller pays for the owner's policy.
Cost of Title Insurance
- The premium is a one-time payment determined by the state, insurance provider, and the property's purchase price.
Benefits of Title Insurance
- Provides peace of mind for homeowners.
- Protects against various issues like forged documents, property line disputes, liens, building code violations, and errors in public records.
Key Differences from other Insurance
- Title insurance focuses on risk prevention, not risk assumption.
- Title examiners eliminate title issues before the purchase.
- It doesn't have monthly payments, only a one-time premium at closing.
Common Risks Covered
- Improperly executed documents.
- Mistakes in recording or indexing legal documents.
- Forgeries and fraud.
- Undisclosed heirs.
- Unpaid taxes and assessments.
- Unreleased mortgages.
- Mental incompetence of property grantors.
- Impersonation of true property owners.
- Refusal of potential buyers due to title condition.
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Description
Learn about title insurance and its importance in property transactions. This quiz explains its types, how it works, and the protections it offers to both buyers and lenders. Understanding title insurance can help mitigate financial losses related to title defects.
