Question 1

James and Paris purchased a home from David and Dana and purchased an owner's policy of title insurance in connection with the purchase. After the sale, it was discovered that David and Dana were separated at the time of the sale and Dana's signature was forged on the deed. Dana claims that the deed is void as to her half interest and demands $100,000 for her interest in the home. James and Paris file a claim with the title insurance company. Will the title insurance company protect them from Dana's claim?

Accepted Answer

The answer of James and Paris purchased a home from...

Question 2

A standard mechanics' lien exception can be removed from a title insurance policy by providing the title insurance company with the following:

Accepted Answer

Providing an affidavit that no liens exist is the best way to remove a mechanics' lien exception from a title insurance policy. This is because the title insurance company is primarily concerned with protecting against any liens or encumbrances on the property, and an affidavit stating that none exist is a clear way to satisfy that concern. A survey, title examination, or pending disbursement clause may be useful in other situations, but they would not necessarily address the lien exception issue.

Question 3

Which of the following matters is not insured against in a loan title insurance policy?

Accepted Answer

Loan title insurance policies typically do not insure against usurious loans, which are loans with interest rates higher than legal limits.

Question 4

Which of the following information would not be found on Schedule A to an owner's title insurance policy?

Accepted Answer

Schedule A of an owner's title insurance policy typically includes the effective date of the policy, the name of the insured, and a description of the property insured. Exceptions for parties in possession are generally found in Schedule B of the policy, not Schedule A.

Question 5

In a title insurance policy, to insure a first priority mortgage loan, if a prior mortgage is found in the title examination, it would be located in which schedule of the title commitment?

Accepted Answer

Schedule B, Part 1 of a title commitment lists exceptions to coverage that will not be covered by the title insurance policy, including existing liens such as prior mortgages.

Question 6

Acme Real Estate Ventures owns a small shopping center. Acme's ownership is insured by an owner's title insurance company. Acme sells the shopping center to Farris Investments. Farris reviews Acme's insurance policy showing ownership in Acme and does a title examination from the date of that policy that shows that Acme has not sold the property. Farris buys the property but does not get an owner's policy of title insurance. Later Farris discovers that Acme did not own the property, as there was a forged deed to one of the previous owners. Can Farris make a claim against the Acme policy?

Accepted Answer

The answer of Acme Real Estate Ventures owns a small...

Question 7

Which of the following information is found on Schedule A of an owner's policy?

Accepted Answer

Schedule A of an owner's policy typically includes the effective date of the policy, the amount of insurance, the name of the insured, and the number of the policy, among other details.

Question 8

An owner purchases a $100,000 parcel of property but only insures for $60,000. There is a partial loss under the policy of $30,000. Under the coinsurance rules, the title insurance company would be liable for the following claim:

Accepted Answer

Under the coinsurance rule, the owner is required to insure the property for at least 80% of its actual value. In this case, the owner only insured the property for 60% of its value, which makes them liable for a penalty.

To calculate the amount of the penalty, we need to apply the following formula:

[(Amount of Insurance carried) / (Amount of Insurance required)] x Loss = Amount of Recovery

[(60,000) / (80,000)] x 30,000 = 22,500

Therefore, the title insurance company would be liable for:

Loss - Amount of Recovery = 30,000 - 22,500 = $7,500

Since the owner only insured for 60% of the property value, the title insurance company would only be responsible for 60% of the $7,500 claim, which is $4,500. Therefore, the correct answer is C.

Question 9

Which of the following risks are not insured against in an owner's ALTA policy?

Accepted Answer

Mechanic's and materialmen's liens are not covered under an owner's ALTA policy.

Question 10

Matters discovered from a title examination of a property would probably be found on:

Accepted Answer

Schedule B of a title insurance policy lists all the matters discovered from a title examination of a property, including liens, encumbrances, and potential restrictions on the property. Schedule A lists the basic information about the property, such as the owner's name and legal description, while Schedule C lists any exclusions from coverage in the title insurance policy.

Question 11

Which of the following is not an exclusion to an owner's title insurance policy?

Accepted Answer

The answer of Which of the following is not an...

Question 12

A pending disbursement clause would most likely be found in:

Accepted Answer

A pending disbursement clause is usually found in a construction loan title insurance policy. This clause ensures that the lender is protected in case the borrower defaults before the construction is completed, and the full loan amount is disbursed. It allows the lender to withhold some of the loan funds until the construction is completed and all liens and claims against the property are cleared.

Question 13

Which of the following is not a risk covered by title insurance?

Accepted Answer

Title insurance does not cover recorded easements as they are part of the public record and can easily be discovered through a title search. The other options listed are all risks that may be covered by title insurance.

Question 14

Exceptions for encroachments can be deleted from a title insurance policy by providing the title insurance company with the following:

Accepted Answer

A survey can provide the title insurance company with precise information about the property boundaries and any encroachments, allowing for the possibility of deleting exceptions for encroachments from the policy.

Question 15

The effective date of an owner's title insurance policy should be the:

Accepted Answer

The effective date of an owner's title insurance policy should be the date of recording of the deed, as that is the date when the ownership is legally transferred and the title is recorded in public records.

Question 16

An owner purchases real property for $100,000.00 and obtains a loan for $80,000.00 from a lender. An owner's title insurance policy could be purchased for the following amount:

Accepted Answer

An owner's title insurance policy is typically purchased for the full purchase price of the property, which in this case is $100,000.00.

Question 17

Good Fortune Company purchases land improved with a building and buys an owner' s title insurance policy in connection with the purchase. The policy is a standard policy with no special endorsements. When Good Fortune applies for a permit to open a restaurant, they are told by the city that the property does not have adequate parking under the zoning ordinance to be used as a restaurant. Does Good Fortune have any valid claim against the title insurance company because of this issue?

Accepted Answer

The answer of Good Fortune Company purchases land improved with...

Question 18

Premiums for title insurance are generally payable:

Accepted Answer

Premiums for title insurance are generally payable only once at the time of issuance. Title insurance protects the policyholder from any defects or issues related to the title of the property being purchased, and the premium is paid when the policy is issued. Unlike other types of insurance, title insurance is not paid on an ongoing annual or monthly basis.

Quiz 13: Title Insurance