Escrow & Title
What is the purpose of title insurance in a Massachusetts real estate transaction?
ATo ensure the property's physical condition
BTo protect against financial loss from defects in title not discovered in the title search✓ Correct
CTo guarantee the property's market value
DTo insure the seller against buyer default
Explanation
Title insurance protects the insured (lender and/or owner) against financial losses arising from defects in title that were not discovered during the title search, such as forged deeds, undisclosed heirs, or recording errors.
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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).
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.
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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