Question 36

Standard title insurance would protect a buyer when the seller has forged an ex-partner's signature on the deed.

Title insurance would indeed protect a buyer in the event that a seller has forged an ex-partner's signature on the deed, as this constitutes a defect in the title that can affect the buyer's ownership rights.

A) when the seller has forged an ex-partner's signature on the deed.

This option is correct because title insurance is designed to protect buyers from defects in title that occur before the purchase, including fraudulent actions such as forgery. If a signature is forged, it can invalidate the deed, and title insurance would cover the buyer against the financial loss that may arise from such a defect.

B) If after closing, the HOA placed a lien on the property for the previous owners' unpaid dues.

This option is incorrect because standard title insurance typically covers issues that existed prior to the purchase. Liens placed after closing, such as those for unpaid dues by previous owners, are not covered by title insurance, as the buyer would be responsible for any new claims arising after the sale.

C) in a purchase where the buyer had knowledge of a shed violating setback requirements.

This option is incorrect because title insurance does not protect against issues that the buyer was aware of at the time of purchase. If the buyer had knowledge of the shed violating setback requirements, they cannot claim protection under the title insurance for that specific issue, as it is considered a known risk.

D) for the purchase of a property bought sight unseen where the buyer discovers a tenant living at the property.

This option is incorrect since title insurance does not cover issues related to the occupancy of the property, especially if the buyer purchased the property sight unseen. The presence of a tenant is an issue of the buyer’s due diligence and does not fall under the coverage of title insurance.

Conclusion

In summary, option A is definitively correct as it addresses a scenario where title insurance would provide crucial protection against fraudulent actions impacting ownership rights. The other options fail because they either involve post-purchase issues or risks known to the buyer, which are not insurable under standard title policies.