Escrow & TitleIntermediateAlaska Exam

Owner's title insurance protects:

AThe lender against loss if the borrower defaults
BThe buyer against loss from title defects that existed before the policy dateCorrect
CThe seller against claims arising after the sale
DThe escrow agent against errors in closing documents, across most transactions

Why The buyer against loss from title defects that existed before the policy date Is Correct

Answer B: The buyer against loss from title defects that existed before the policy date

Owner's title insurance protects the buyer from financial loss due to title defects, liens, encumbrances, or other title problems that existed prior to the policy date but were not discovered in the title search. The policy protects the owner as long as they hold an interest in the property.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

Key Escrow & Title Terms in This Question

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

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