Question 1

It is not necessary for a title examination of the property to take place to issue a title insurance commitment.

Accepted Answer

A title examination is necessary to issue a title insurance commitment because it involves reviewing public records to identify any defects or issues with the property's title that need to be resolved before insurance can be provided.

Question 2

All requirements that are necessary for title insurance to be issued are shown on Schedule A of a title insurance commitment.

Accepted Answer

Schedule A of a title insurance commitment typically outlines the basic information such as the effective date, the amount of insurance, the type of interest being insured, and the names of the parties involved. The requirements necessary for issuing the title insurance are actually listed on Schedule B-I, not Schedule A.

Question 3

All requirements for the issuance of title insurance are contained on Schedule B, Part 2, of a title insurance commitment.

Accepted Answer

Schedule B, Part 2 of a title insurance commitment lists exceptions to coverage, not requirements for issuance. Requirements are typically found in Schedule B, Part 1.

Question 4

A title insurance company has an obligation to defend at its own expense any title defects that are insured by the policy.

Accepted Answer

Title insurance policies typically include a provision for the insurer to defend the insured against any claims or legal actions that arise from covered title defects. This is one of the main benefits of title insurance, providing peace of mind and protection against unforeseen expenses related to the ownership of real property.

Question 5

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 6

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 policy number, among other details.

Question 7

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

Accepted Answer

Schedule A of a title insurance policy typically includes the effective date, name of the insured, and description of the property. Exceptions for parties in possession are usually found in Schedule B, which lists exceptions to coverage.

Question 8

A pending disbursement clause would most likely be found in an owner's policy.

Accepted Answer

A pending disbursement clause is typically found in a lender's policy, not an owner's policy, as it relates to the disbursement of loan funds over time for construction or other purposes.

Question 9

A mechanic's lien is generally a standard exception in an owner's policy.

Accepted Answer

A mechanic's lien is typically a standard exception in an owner's title insurance policy because it arises from work done on the property that has not been paid for, and title insurance often excludes coverage for such liens unless specific endorsements are added.

Question 10

An insured claimant has a duty to notify the title insurance company of any title defects that may result in a claim under the insurance.

Accepted Answer

This is true because the insured claimant has a duty to notify the title insurance company of any potential title defects or issues that may arise that could result in a claim being made against the insurance policy. Failing to notify the insurance company of such defects could result in the claim being denied.

Question 11

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

Accepted Answer

Schedule B of a title insurance policy lists any matters or defects discovered during a title examination of the property. Schedule A contains the basic information about the property being insured, and Schedule C lists any exclusions or exceptions to the policy coverage.

Question 12

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 13

An owner purchases a $100,000.00 parcel of property but only insures for $60,000.00. There is a partial loss under the policy of $30,000.00. Under the co-insurance rules, the title insurance company would be liable for the following claim:

Accepted Answer

Under co-insurance rules, the insurance company pays a proportion of the loss based on the ratio of the insured amount to the required insurance amount. Here, the owner insured 60% of the property's value ($60,000/$100,000), so the insurer covers 60% of the $30,000 loss, which is $18,000.

Question 14

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 15

A title insurance commitment should not be issued without a title examination of the property to be insured.

Accepted Answer

A title insurance commitment is a promise to issue a title insurance policy after completion of certain requirements, such as a title examination. Therefore, a title examination of the property to be insured must be conducted before a commitment can be issued.

Question 16

A standard mechanic's lien exception can be deleted by providing the title insurance company with the following:

Accepted Answer

An affidavit that no liens exist assures the title insurance company that there are no outstanding mechanic's liens, allowing them to remove the standard exception.

Question 17

A pending disbursement clause would most likely be found in a construction loan title insurance policy.

Accepted Answer

A pending disbursement clause is designed to protect the lender from disbursing funds for work that has not yet been completed. This type of clause is commonly found in construction loan title insurance policies, as the disbursement of funds in these types of loans is typically tied to the completion of specific construction phases or milestones.

Question 18

Title insurance cannot be issued without a title insurance commitment.

Accepted Answer

The answer of Title insurance cannot be issued without a...

Question 19

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

Accepted Answer

Title insurance typically covers risks such as forgery, falsification of records, and issues with the validity of a deed. However, a recorded easement is a known and documented right that is not considered a defect or risk that title insurance would cover.

Question 20

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

Accepted Answer

Mechanic's and materialmen's liens are typically not covered by an owner's ALTA policy unless specific endorsements are added.

Quiz 9: Title Insurance