Question 44

A buyer may BEST gain protection from losses due to defects in the title of property by obtaining an owner's policy of title insurance.

An owner's policy of title insurance provides coverage that protects the buyer from losses resulting from defects in the title, such as liens, claims, or other issues that may not be disclosed during the purchase process.

A) obtaining an owner's policy of title insurance

This option is correct because an owner's policy of title insurance specifically protects the buyer against financial loss due to defects in the title. It ensures that the buyer is compensated for any issues that arise post-purchase, making it the most effective means of gaining protection.

B) acquiring a deed to the title

While acquiring a deed is essential for transferring ownership of the property, it does not provide protection against defects in the title itself. A deed alone does not address any encumbrances or claims that may exist prior to the transfer of ownership.

C) signing a contract with the seller

Signing a contract with the seller is a necessary step in the transaction process, but it does not offer protection against title defects. The contract may outline terms of the sale but does not safeguard the buyer from potential losses related to title issues that may arise later.

D) requiring the seller to show proof of ownership

Requiring proof of ownership from the seller can provide some assurance that the seller has the right to sell the property. However, it does not protect the buyer against latent defects or claims that may not be evident at the time of the sale.

Conclusion

Obtaining an owner's policy of title insurance is the most effective way for a buyer to protect against losses from title defects, as it offers financial coverage that other options do not. Other choices, such as acquiring a deed or requiring proof of ownership, do not provide the same level of protection and fail to address potential hidden issues that could affect the title after the purchase.