Escrow & Title
In Minnesota, 'subrogation' in title insurance means:
AThe title company transfers the policy to the new buyer
BThe title company, after paying a claim, may step into the insured's shoes to pursue recovery from the party responsible for the title defect✓ Correct
CThe buyer gives up their right to sue the seller after obtaining title insurance
DThe lender's title policy is subrogated to the owner's policy
Explanation
Subrogation is a common insurance principle. After a title insurance company pays a claim to the insured (for example, for a forged deed), it acquires the insured's right to sue the party responsible for the title defect.
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
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