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Standard title insurance would protect a buyer

Rationale

Standard title insurance would protect a buyer when the seller has forged an ex-partner’s signature on the deed.

Title insurance safeguards buyers from defects in the title that can arise from prior transactions, including forgery. If a seller forges a signature, it creates a cloud on the title which title insurance would typically cover, ensuring the buyer’s ownership is protected against legal claims arising from such fraudulent actions.

A (when the seller has forged an ex-partner's signature on the deed.) CORRECT

This scenario is a classic example of a title defect, as the forged signature undermines the validity of the deed. Title insurance is designed to protect against such issues, ensuring that the buyer has recourse if the title is contested due to fraud, thereby preserving their legal ownership of the property.

B (If after closing, the HOA placed a lien on the property for the previous owners' unpaid dues.) YOUR ANSWER

This situation typically falls outside the protection of standard title insurance, as it pertains to obligations incurred by the previous owners after the sale has been finalized. Title insurance generally protects against defects in the title that existed prior to closing, not subsequent liens or obligations arising from the actions of the new homeowners.

C (in a purchase where the buyer had knowledge of a shed violating setback requirements.) YOUR ANSWER

Knowledge of the shed's violation by the buyer indicates a pre-existing issue that could affect property use and value but does not constitute a title defect. Title insurance does not cover problems that buyers are aware of prior to closing, as it cannot protect against issues that the buyer has accepted or ignored.

D (for the purchase of a property bought sight unseen where the buyer discovers a tenant living at the property) YOUR ANSWER

This scenario involves an occupancy issue rather than a title defect. Title insurance does not cover disputes regarding tenants or property condition, especially when the buyer has chosen to purchase the property without reviewing it in person. The buyer’s lack of due diligence does not invoke title insurance protection.

Conclusion

Title insurance serves to protect buyers from defects that compromise their ownership rights, such as forgery of a signature on a deed. In contrast, issues arising after the closing or those known to the buyer prior to purchase, such as liens or violations, fall outside its coverage. Understanding the limitations and protections of title insurance is crucial for buyers to ensure they are adequately covered against potential claims.

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