Escrow & Title
What is the purpose of a title insurance owner's policy in an Illinois real estate transaction?
ATo protect the lender against loss if the borrower defaults
BTo protect the buyer against loss from title defects, liens, or encumbrances that existed before the sale✓ Correct
CTo guarantee the property will appreciate in value
DTo cover the buyer for damage to the property after closing
Explanation
An owner's title insurance policy protects the buyer against financial loss from covered title defects, liens, or encumbrances that existed before the sale but were not discovered during the title search. Unlike a lender's policy (which only protects the lender), an owner's policy protects the buyer's equity. In Illinois, it is a one-time premium paid at closing and is typically negotiable as to which party pays.
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