Unit 4: Marketable Title & Title Insurance Policies

Question 1

Why is receiving marketable title the goal of a buyer?

Answer 1

This is title free and clear of liens, encumbrances, or defects.

Question 2

What does a title search entail?

Answer 2

The search from the present to the original title of a property.

Question 3

What is present if the title is said to be clouded?

Answer 3

There are errors or missing documents found in the search for all past title’s on a piece of property.

Question 4

What is the abstract of title?

Answer 4

A historical summary of all recorded documents affecting title of a property.

Question 5

What is the best way to insure marketable title?

Answer 5

Title Insurance

Question 6

What is title insurance?

Answer 6

Insurance that protects against losses resulting from undiscovered title defects.

Question 7

What are the 2 kinds of title insurance?

Answer 7

1) Owners

2) Mortgagee

Question 8

What is used to clear a clouded title?

Answer 8

Suit to Quiet Title

Question 9

What is a suit to quiet title?

Answer 9

A court hearing to determine ownership, recognize other valid claims, and “quiet” invalid claims.

Question 10

T/F When there is clouded title, a lis pendens is filed.

Answer 10

True

Question 11

Clear or marketable title is required to purchase a house, what are the 4 different ways that a seller can show marketable title?

Answer 11

CATT

1) Abstract of title
2) Certificate of title
3) Title Insurance
4) Torrens System

Question 12

What is included in a title report?

Answer 12

The report states the current state of title. It shows the current status of recorded encumbrances.

Question 13

What is not shown on a title report?

Answer 13

The history of past owners/encumbrances.

Question 14

What is included in the title commitment?

Answer 14

The commitment lists policy exceptions, defects and encumbrances that exist but are not covered in the policy.

Question 15

What is the coverage cost based on for a buyer’s title insurance?

Answer 15

The sale price of the property.

Question 16

What is the coverage cost based on for the lender’s title insurance?

Answer 16

The loan amount.

Question 17

How long does a buyer’s title insurance last?

Answer 17

Until the property changes title.

Question 18

T/F A standard coverage policy protects the new buyer/owner against all problems found before closing.

Answer 18

False. A standard coverage policy protects the new buyer/owner against all problems found AFTER closing.

Question 19

What is covered by the standard coverage?

MIIFED

Answer 19

• Errors in title examination or the abstract
• Defects found in public records
• Forgery, incompetency, misrepresented marital status, and improperly prepared deeds.

Question 20

What is covered by the extended coverage title insurance?

GUMPA

Answer 20

• All items in the standard coverage
• Parties in possession
• Matters of survey such as encroachments
• Gap period
• Unrecorded liens

Question 21

What is not covered in any policy?

Answer 21

• All exceptions listed in the commitment or policy including liens
• Defects known to the buyer or seller
• Zoning use or changes

Question 22

What does the extended owner’s coverage add to the title insurance?

Answer 22

It protects against problems that are not a matter of public record but could be discovered through inspection (encroachments).

Question 23

How is title insurance different than most insurance plans?

Answer 23

The premium is paid only once when the policy is issued at the closing.

Question 24

What is a lis pendens?

Answer 24

A recorded notice of a pending lawsuit affecting title to property.