Escrow & Title
In South Dakota, an 'owner's title insurance policy' protects:
AThe mortgage lender against borrower default
BThe property owner against losses from title defects existing before the policy date✓ Correct
CThe escrow company against errors in closing calculations
DThe real estate agent against claims of misrepresentation
Explanation
An owner's title insurance policy (as distinguished from a lender's policy) protects the property owner against financial losses from title defects, liens, or encumbrances that existed before the policy was issued but were not discovered in the title search. It remains in effect for as long as the owner holds title.
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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.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
EncumbranceAny claim, lien, charge, or liability attached to real property that affects its value or limits its use.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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