Question 22

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

Title insurance is designed to protect buyers from defects in the title that might not be discovered during the closing process. A forged signature on the deed represents a significant title defect that could invalidate the ownership rights of the buyer, making option A the correct choice.

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

This option is correct because title insurance covers losses arising from title defects, including instances of forgery. If a seller forges a signature, it could lead to disputes over ownership, and the title insurance would protect the buyer from such legal challenges.

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

This option is incorrect as standard title insurance typically does not cover claims arising from liens placed after the closing date for issues that existed prior to the buyer's purchase. Since the lien was for the previous owner's unpaid dues, it would likely fall outside the protection of standard title insurance.

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 buyers against issues that they are aware of at the time of purchase. Knowledge of a violation would exempt the buyer from coverage because they should have accounted for this potential 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 as well because title insurance does not cover issues related to tenant rights or occupancy. Discovering a tenant living in the property does not constitute a defect in the title itself, and therefore, would not be a valid claim under title insurance.

Conclusion

In summary, option A is the only choice that directly aligns with the protections offered by standard title insurance against title defects such as forgery. Other options either describe scenarios outside the coverage of title insurance or involve buyer knowledge that nullifies potential claims. Thus, option A stands as the definitive correct answer in this context.