Question 87

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

Title insurance provides protection against losses arising from defects in the title to a property, including instances of fraud such as forgery. In this case, if a seller forges an ex-partner's signature, the title would be considered defective, and the title insurance would cover any claims arising from this issue.

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

This option is correct because title insurance specifically protects against issues like forgery that affect the ownership of the property. If a signature is forged, this creates a legal defect in the title, which title insurance would cover, ensuring the buyer is protected against any claims or losses resulting from the fraudulent act.

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 does not protect against liens placed by homeowners associations after the purchase has been completed. Such liens are typically the responsibility of the current owner unless they were disclosed prior to closing.

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

This option is incorrect as well because title insurance does not cover issues that the buyer is already aware of at the time of purchase. If the buyer knows about the shed violating setback requirements, they assume the risk associated with that issue.

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

This option is also incorrect because title insurance does not cover issues related to tenants or occupancy unless there is a specific title defect. Discovering a tenant after a sight-unseen purchase does not constitute a defect in the title itself and is therefore not a scenario covered by title insurance.

Conclusion

The correct answer, A, is definitive because it addresses a scenario where a title defect arises from fraudulent actions, which is precisely what title insurance is designed to protect against. Other options fail to meet the criteria for coverage under standard title insurance, as they involve issues that are either known to the buyer or occur after the title transfer. Thus, A stands out as the only choice that aligns with the protective nature of title insurance.