What does title insurance protect a borrower against?

What does title insurance protect a borrower against?

• A. Future property taxes
• B. Any unpaid liens or claims against the property prior to closing
• C. Legal interruptions from neighboring properties
• D. Damage to property due to environmental hazards

Answer: (B)

Title insurance is designed to protect the borrower from any unpaid liens or claims against the property that existed prior to closing. This insurance ensures that the title to the property is clear and that the borrower will not face unexpected legal issues stemming from previous property ownership or claims. For instance, if there are unresolved mortgages, tax liens, or other encumbrances that were not disclosed before the sale, title insurance provides coverage for the borrower to address these issues. By securing title insurance, the borrower gains peace of mind knowing that if any claims arise regarding ownership or liens after the closing, the title insurance will cover the legal costs and any financial repercussions associated with those claims. Thus, it acts as a safeguard against financial loss related to title disputes that may have originated before the borrower acquired the property.

Title insurance is designed to protect the borrower from any unpaid liens or claims against the property that existed prior to closing. This insurance ensures that the title to the property is clear and that the borrower will not face unexpected legal issues stemming from previous property ownership or claims.

For instance, if there are unresolved mortgages, tax liens, or other encumbrances that were not disclosed before the sale, title insurance provides coverage for the borrower to address these issues. By securing title insurance, the borrower gains peace of mind knowing that if any claims arise regarding ownership or liens after the closing, the title insurance will cover the legal costs and any financial repercussions associated with those claims. Thus, it acts as a safeguard against financial loss related to title disputes that may have originated before the borrower acquired the property.