Difficulty: Hard

Average Score: 7%

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 scenario, title insurance covers the buyer from potential losses due to defects in the title, including fraudulent signatures. If a seller forges a signature, the title is not valid, and the title insurance policy would provide protection against any claims arising from this issue.

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

This choice is correct because title insurance protects against claims stemming from defects in the title, such as fraud. If the seller forges a signature, it creates a cloud on the title, and the insurance would cover any legal costs or losses the buyer incurs as a result.

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

This choice is incorrect because standard title insurance typically does not cover liens placed after the closing date for the previous owner's debts. Buyers are encouraged to conduct due diligence regarding any existing liens before the purchase, and post-closing issues are generally not within the insurance's coverage.

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

This choice is incorrect since title insurance does not cover regulatory issues or violations with zoning laws. If the buyer is aware of the shed's violation, they assume the risk, and title insurance would not protect them from potential penalties or enforcement actions related to local ordinances.

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 because title insurance does not address tenancy issues or disputes arising from occupant rights. A buyer purchasing a property sight unseen should conduct thorough investigations to avoid surprises regarding current tenants, as title insurance does not cover such scenarios.

Conclusion

Title insurance provides vital protection against defects in property titles, particularly those arising from fraudulent actions like forgery. Understanding the limitations of title insurance is crucial for buyers to navigate potential risks effectively. While it can safeguard against issues like forged signatures, it does not extend to other property-related disputes, emphasizing the importance of due diligence prior to finalizing a real estate transaction.

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