Question

At closing, a home purchaser was given an owner's title policy. Which of the following would NOT be a characteristic of the policy?

a) Protection against title defects.

b) Coverage for the lender's interest.

c) One-time premium payment.

d) Coverage for undisclosed heirs.

Answer 1

An owner's title policy protects the purchaser against title defects and is paid for via a one-time premium. The coverage for the lender's interest is not a characteristic of an owner's title policy but is covered by a separate lender's title insurance policy.

Step-by-step explanation:

The question is inquiring about the characteristics of an owner's title policy in a real estate transaction. An owner's title policy is designed to protect the purchaser against potential title defects, such as undisclosed heirs or errors in public records. It is commonly paid for with a one-time premium payment at the time of closing. The characteristic that would NOT be associated with an owner's title policy is coverage for the lender's interest; this is typically covered by a separate policy known as the lender's title insurance. Therefore, the correct answer is (b) Coverage for the lender's interest. Escrow, while related to the purchasing process, is a separate entity that handles the deposit and disbursement of funds for insurance and property taxes as part of the mortgage payment.