Escrow & Title
A lender's title insurance policy protects:
AThe buyer's equity
BThe lender's security interest up to the outstanding loan balance✓ Correct
CThe seller from any future claims
DBoth the buyer and the lender equally
Explanation
A lender's (mortgagee's) title policy protects the lender's interest — the outstanding loan balance — in the event a title defect is discovered. It does not protect the buyer's equity; the buyer needs a separate owner's policy for that.
Related Alabama Escrow & Title Questions
- Recording a deed in Alabama protects the buyer by:
- The chain of title refers to:
- For a deed to be valid in Alabama, it must include all of the following EXCEPT:
- Marketable (merchantable) title means:
- Proration at closing refers to:
- A title insurance policy that protects the lender's interest is called a:
- The Closing Disclosure (CD) must be provided to the buyer at least how many business days before closing?
- In Alabama, a deed must be recorded in:
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