Difficulty: Medium

Average Score: 62%

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 the buyer against defects in the title, including instances of fraud such as forgery. If a seller forges a signature, it creates a legal defect that title insurance would cover, ensuring the buyer's ownership rights are protected.

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

This situation clearly involves fraud, which is a major risk that title insurance is designed to mitigate. If a seller forges a signature, the title is considered invalid, and the buyer is protected by the title insurance policy against such claims.

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

While this situation may seem relevant, standard title insurance typically covers issues that existed prior to the purchase. Liens placed after closing are generally not covered, as the buyer would be responsible for issues arising post-transaction, including unpaid dues from previous owners.

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

Knowledge of a violation by the buyer implies acceptance of the risk associated with the property. Title insurance does not cover issues that the buyer is aware of at the time of purchase, such as zoning or setback violations, as these are considered to be the buyer's responsibility.

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

This scenario does not involve a defect in the title itself; rather, it presents a situation where the buyer should have conducted due diligence before purchase. Title insurance would not cover issues relating to tenant occupancy unless there was a specific defect in the title associated with that situation.

Conclusion

Standard title insurance provides vital protection to buyers against legal defects in property titles, particularly in cases of fraud such as forgery. In contrast, issues that arise after closing, or those known to the buyer before purchase, fall outside the scope of coverage. Understanding these distinctions is crucial for buyers to ensure their rights and investments are adequately protected.

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