Escrow & Title
In Iowa, title insurance protects against:
AFuture physical damage to the property
BDefects in the title that arose before the policy date✓ Correct
CFuture zoning changes that affect the property's use
DThe property's decline in market value
Explanation
Title insurance protects against defects in title that existed prior to and at the time the policy is issued — such as undisclosed heirs, forged documents, or recording errors. It does not cover physical damage, future changes, or changes in market value.
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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.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
Abstract of TitleA condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
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