fundamentals chapter 3 part 5

Encroachment ?

A physical intrusion onto neighboring property, usually due to a mistake regarding the location of the boundary.

Restrictive Covenant ?

A promise to do or not do an act relating to real property, especially one that runs with the land; usually an owner's promise to not use property in a specified manner.

An investigation of the seller's title is an essential step in a real estate transaction. Nowadays, nearly all buyers have a title insurance company perform a title search. A title company not only investigates the chain of title, it offers the buyer the ?

additional protection of title insurance.

The standard coverage policy does not insure against ?

claims and problems that might be disclosed by an inspection or survey of the property, such as adverse possession or an encroachment.

If the title report reveals unexpected problems, the buyer or the buyer's lender may require the seller to ?

clear them up before the transaction proceeds.

The first step in obtaining title insurance for a transaction is the title search. The buyer or seller pays a fee to the title company to cover the cost of the search. Based on the title search, the company issues a title report for the property. All defects and encumbrances found in the public record are listed in the report. These will be ?

excluded from coverage when the policy is issued.

Whenever a buyer finances a real estate purchase with an institutional loan, the lender will request an ?

extended coverage policy to protect its interest.

In some states, buyers obtain only an abstract of title, which is examined by an attorney who then delivers an opinion as to the suitability of the title. However, an abstract of title is merely a ?

history of recorded interests in the property; it does not offer the financial protection against undiscovered defects that is provided by title insurance.

When the condition of the title is satisfactory to the buyer or lender, the title company issues the ?

insurance policy.

It's important to note that certain types of problems are not covered by title insurance. Title insurance policies do not insure against ?

losses due to government action, such as condemnation or zoning changes.

A standard coverage title insurance policy insures against ?

losses resulting from any encumbrances of record that the title searcher overlooked and failed to include in the title report. The standard coverage policy also insures against hidden problems such as forged signatures, fraud, incompetency, and improperly delivered deeds.

A title policy that protects a lender's security interest in the property is often called a ?

mortgagee's policy.

A title insurance policy is a contract between a title insurance company and a policyholder. The policyholder is ordinarily either a property buyer or a lender providing financing for a transaction. A title policy issued to a buyer is commonly called an ?

owner's policy.

An extended coverage policy covers the same things as a standard coverage policy, plus ?

problems that should be discovered through inspection of the property. Before issuing an extended coverage policy, the title company sends an inspector to the property to look for encroachments and other potential problems.

In the title insurance policy, the title insurance company agrees to ?

reimburse the policyholder for financial losses resulting from title defects covered by the policy. And if someone makes an adverse claim against the title, the title company will handle the legal defense against the claim.

The title company charges a ______, which covers the entire life of the policy. The policy lasts as long as the policyholder has a ?

single premium legal interest in the property.

How much protection a title insurance policy offers depends on the type of policy purchased. Traditionally, there were two types of title insurance policies: ? In addition to standard and extended coverage, title companies now offer a third type of policy: ?

the standard coverage policy and the extended coverage policy. homeowner's coverage.

In addition to standard and extended coverage, title companies now offer a third type of policy: homeowner's coverage. Homeowner's coverage is available in transactions involving residential property with up to four units. A homeowner's title policy covers most of the same title problems that an extended coverage policy addresses. It also covers some additional items, such as ?

violations of restrictive covenants.