Humber/Ontario Real Estate Course 3 Exam Practice

What is a correct statement about title insurance?

1. It might eliminate the need for a survey.

2. Any title-related issue discovered before closing is excluded from coverage.

3. Title insurance is beneficial only to buyers.

4. It covers actual losses but not legal costs for claims.

5. It is mandatory for all real estate transactions.

6. Title insurance is only applicable for residential properties.

The correct answer is: It might eliminate the need for a survey.

Title insurance serves as a crucial element in real estate transactions by protecting property owners and lenders from potential defects in title that could arise after closing. The assertion that it might eliminate the need for a survey is accurate because title insurance can protect against various issues, such as mistakes in the public records or unknown liens, that would typically require a survey to identify. If a title insurance policy is comprehensive enough, it could mitigate the risks that would normally necessitate conducting a survey, allowing parties to proceed with confidence without incurring the additional expense and delay of surveying the property. The other statements fall short because they either misunderstand the scope of title insurance or misrepresent its requirements and benefits. Title insurance is not only for buyers; it serves both buyers and lenders, providing security for their investment. Title insurance does not typically exclude title-related issues discovered before closing; rather, it generally covers issues that may arise post-transaction that were not disclosed. Furthermore, while title insurance certainly covers actual losses, it primarily provides coverage for legal costs incurred during claims, contradicting the statement about its limited scope. Additionally, title insurance is not mandatory for all real estate transactions and applies to both residential and commercial properties. Understanding these nuances helps clarify the role of title insurance in protecting property owners