Escrow & Title
Title insurance underwriters perform a title search before issuing a policy to:
ADetermine the property's market value
BIdentify and assess title risks before insuring against them✓ Correct
CCalculate transfer taxes
DConfirm the property's zoning classification
Explanation
The title search identifies liens, encumbrances, and potential defects in the chain of title. The title company reviews these risks and either resolves them before closing or excludes specific issues from coverage.
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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.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
EncumbranceAny claim, lien, charge, or liability attached to real property that affects its value or limits its use.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Math Concepts
State-Specific Concepts
Transfer Tax
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