Question 22

Title insurance may be used to protect the interest of a buyer.

Title insurance is specifically designed to protect buyers from potential defects in the title to a property. This coverage ensures that the buyer's investment is safeguarded against issues such as liens, encumbrances, or other claims that may arise after the purchase.

A) an optionee.

An optionee, who holds an option to purchase a property, does not have ownership rights until the option is exercised. Therefore, title insurance does not protect their interest unless they actually become the buyer after exercising the option.

B) a buyer.

A buyer is the correct answer because title insurance directly protects their ownership rights against any title defects that could affect their investment. This insurance provides peace of mind to buyers by covering legal fees or losses resulting from disputes over property ownership.

C) a broker.

A broker facilitates transactions between buyers and sellers but does not hold ownership interest in the property themselves. Consequently, title insurance does not provide any protection for brokers, as they are not the ones purchasing the property.

D) a tenant.

A tenant has a leasehold interest in a property but does not own it. Title insurance is not relevant for tenants since it is meant to protect the interests of property owners, not those who rent or lease.

Conclusion

The correct answer is that title insurance protects the interest of a buyer, ensuring their investment is secure against potential title issues. Other options, such as an optionee, broker, or tenant, do not hold ownership rights or direct interests that title insurance would cover, making them incorrect choices in this context.