Question 87

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

In the case of a forged signature by the seller on the deed, title insurance would cover the buyer from any financial loss resulting from this fraudulent action. This protection ensures that the buyer's ownership rights are secure against claims arising from the misrepresentation.

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 issues arising from defects in the title, including fraudulent signatures. If a seller forges a signature, it can result in legal disputes and ownership claims, which title insurance would cover.

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 liens that arise after the closing of the sale. Liens for unpaid dues from previous owners are usually the responsibility of the new owner unless explicitly stated otherwise in the title policy.

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

This option is also incorrect. Title insurance does not protect against issues that the buyer was aware of prior to the purchase. Knowledge of zoning violations, such as a shed violating setback regulations, would likely preclude any claims under the insurance policy.

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. Title insurance does not cover issues related to the occupancy status of a property, especially if the buyer did not conduct due diligence before the purchase. Discovering a tenant living in the property after closing may lead to other legal issues but is not a title defect.

Conclusion

The answer A is definitively correct as it directly relates to the core function of title insurance, which is to protect against defects in ownership claims, including fraudulent actions by the seller. Options B, C, and D fail to meet the criteria for coverage under standard title insurance, either because they involve post-closing events, known issues, or occupancy disputes not covered by the policy.