Escrow & TitleIntermediateArizona Exam

In Arizona, title insurance protects the insured against losses from:

AFuture zoning changes that restrict the property's permitted uses after the policy's effective date

BDefects in title that existed before the policy's effective date but were not discovered by the title searchCorrect

CPhysical damage to structures caused by natural disasters, flooding, or fire

DProperty tax increases that occur after the purchase date

Why Defects in title that existed before the policy's effective date but were not discovered by the title search Is Correct

Answer B: Defects in title that existed before the policy's effective date but were not discovered by the title search

Title insurance protects against losses from undiscovered title defects, liens, encumbrances, or other issues that existed before the policy was issued. It does not cover future events, physical damage, or post-closing matters.

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.

Zoning

Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.

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Key Terms to Know

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.

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.

Zoning

Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.

Math Concepts

Profit & Loss

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