Escrow & Title
A title insurance policy in Maine protects against:
AFuture damage to the property from natural disasters
BDefects in the title that existed prior to the policy date✓ Correct
CFuture encumbrances placed on the property after closing
DPhysical damage to improvements
Explanation
Title insurance protects the insured against losses arising from defects in title that existed prior to the policy date, such as unknown liens, forged deeds, or errors in public records.
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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.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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.
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