Escrow & TitleIntermediateDelaware Exam

What is a 'gap indemnity' in a Delaware commercial real estate closing?

AInsurance covering the gap between the purchase price and the appraised value

BA written agreement protecting the title insurer for any liens or interests arising in the 'gap period' between title search and recordingCorrect

CIndemnification by the seller for undisclosed defects discovered after closing

DA credit from the seller to the buyer for deferred maintenance

Why A written agreement protecting the title insurer for any liens or interests arising in the 'gap period' between title search and recording Is Correct

Answer B: A written agreement protecting the title insurer for any liens or interests arising in the 'gap period' between title search and recording

A gap indemnity is an agreement (often from the seller or a title company) to indemnify the title insurer for any interests arising in the gap period between the date of the final title search and the recording of the new deed.

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

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

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.

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Key Terms to Know

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

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.

Loan-to-Value Ratio (LTV)

The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.

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