Escrow & Title
In Montana, a buyer's lender typically requires title insurance for which primary reason?
ATo protect the buyer from losing their earnest money deposit
BTo protect the lender's security interest against title defects that could impair or eliminate the mortgage lien✓ Correct
CTo guarantee the property will appraise at the purchase price
DTo ensure the seller's disclosure is accurate
Explanation
Lenders require title insurance (loan policy) to protect their mortgage lien against undiscovered title defects—such as prior liens, forged deeds, or heir claims—that could threaten the lender's security interest in the Montana property. The policy protects the lender, not the buyer.
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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.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Math Concepts
State-Specific Concepts
Escrow Disputes
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