Difficulty: Medium

Average Score: 67%

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 covers losses arising from defects in the title, including fraudulent activities such as forgery. If a seller forges a signature, the title is not valid, and title insurance would protect the buyer from potential legal issues and financial losses resulting from this defect.

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

This choice is correct because title insurance specifically protects against defects such as forgery. If a deed includes a forged signature, the title is considered invalid, and the insurance would cover any losses incurred by the buyer due to this fraudulent action.

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

This choice is incorrect as standard title insurance typically does not cover liens placed after the purchase is finalized. The insurance protects against issues that arise before the closing; thus, any subsequent liens resulting from the previous owners' unpaid dues would not be covered.

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

This choice is incorrect because the buyer's knowledge of existing zoning violations or property disputes typically negates coverage under title insurance. Title insurance protects against unknown defects, and if the buyer was aware of the violation, they cannot claim protection for it.

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

This choice is incorrect as standard title insurance does not address issues related to occupancy or tenant rights. If a buyer purchases a property without inspecting it and later finds a tenant, this situation does not constitute a title defect covered by the insurance.

Conclusion

Title insurance serves to protect buyers from various title defects, including forgery, which undermines the validity of ownership. The correct answer emphasizes the protection against such fraudulent actions, while the other options highlight scenarios that either fall outside the scope of title insurance or involve issues the buyer knowingly accepted. Understanding what title insurance covers is essential for safeguarding real estate investments and ensuring legal ownership.

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