Difficulty: Easy

Average Score: 89%

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.

In this case, standard title insurance protects the buyer from claims arising due to defects in the title, including fraudulent actions such as forgery. If the deed has been signed illegally, the title insurance would cover any resulting legal disputes or financial losses the buyer may face.

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

This situation represents a clear title defect, as the forged signature invalidates the transfer of ownership. Standard title insurance is specifically designed to protect buyers from such issues, ensuring they have a valid title free from disputes or claims by previous owners or parties.

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

In this scenario, the lien would not be covered by standard title insurance since it pertains to obligations incurred by the previous owners, which may be excluded from coverage if the buyer did not verify the status of liens prior to closing. Title insurance generally protects against issues that arise from the title itself, rather than ongoing obligations related to property use.

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

Knowledge of the shed violating setback requirements indicates that the buyer was aware of a potential zoning issue prior to purchase, which would likely void coverage under title insurance. Title insurance typically does not protect against problems that the buyer knowingly accepted.

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

This situation does not involve a title defect but relates more to the buyer's due diligence and expectations concerning property occupancy. Title insurance does not extend to disputes regarding existing tenants or their rights unless it affects the legal title.

Conclusion

Title insurance serves as a safeguard against defects in property ownership, particularly legal issues like forgery that can undermine the legitimacy of a deed. Among the choices presented, only scenario A demonstrates a clear instance where title insurance would provide protection, while the other situations involve issues that either fall outside of the policy's coverage or involve buyer knowledge that negates protection. Understanding these distinctions is crucial for buyers to ensure they are adequately protected in real estate transactions.

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