Escrow & TitleIntermediateDelaware Exam

A lender's title insurance policy protects:

AThe buyer against all future defects
BThe lender against title defects up to the outstanding loan balanceCorrect
CBoth the buyer and lender equally
DThe seller after closing

Why The lender against title defects up to the outstanding loan balance Is Correct

Answer B: The lender against title defects up to the outstanding loan balance

A lender's (mortgagee's) title insurance policy protects the lender's security interest up to the outstanding loan amount. It does not protect the buyer; a separate owner's policy is needed for that.

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

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