Escrow & Title
A Massachusetts buyer purchases a property and discovers after closing that there is an undisclosed easement allowing a utility company to run power lines across the backyard. The buyer's title insurance policy would:
ANever cover easements under any circumstances
BCover the loss if the easement was not disclosed on the title commitment and was unknown at closing✓ Correct
CCover only physical damage from the power lines
DRequire the buyer to sue the seller first
Explanation
Owner's title insurance protects against undisclosed encumbrances that were not discovered during the title search and not listed as exceptions on the policy. An undisclosed easement that impairs the property's value or use would typically be a covered claim.
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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.
EncumbranceAny claim, lien, charge, or liability attached to real property that affects its value or limits its use.
EasementA non-possessory right to use another person's land for a specific purpose.
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
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