Escrow & Title
An Ohio buyer's lender requires a survey before closing. The survey reveals an encroachment by the neighbor's fence onto the subject property. This must be:
AIgnored because the fence has been there for years
BDisclosed to the buyer and resolved before closing or at closing with title insurance exception✓ Correct
CAutomatically removed by the neighbor before closing
DReported to the county recorder
Explanation
An encroachment is a title defect that must be disclosed to the buyer. It may be resolved by moving the fence, obtaining a written agreement, or by taking title subject to the encroachment with a title insurance exception.
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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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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