Escrow & Title
In Illinois, a real estate closing attorney who discovers a cloud on the title during their review should:
AComplete the closing and disclose the cloud on the title insurance policy
BAdvise their client of the cloud, work to resolve it, or advise against closing until it is cleared✓ Correct
CReport the cloud to IDFPR
DRefuse to handle the closing without additional compensation
Explanation
An attorney who discovers a cloud on title during their title review should advise their client of the problem, take steps to resolve or cure the title issue, or recommend that the client not close until the cloud is cleared. Proceeding to close without resolving a known title problem could expose the attorney to malpractice liability.
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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.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
ProrationThe division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
Math Concepts
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