License holders must advise buyers to obtain what type of policy?

License holders must advise buyers to obtain what type of policy?

• A. Title Insurance Policy
• B. Homeowners Insurance
• C. Mortgage Insurance
• D. Hazard Insurance

Answer: (A)

The key idea is protecting the buyer’s ownership rights. A title insurance policy is the protection buyers obtain to guard against losses from defects in the title that aren’t found in the public records before closing. These defects can include forged signatures, undisclosed heirs, outstanding liens, misindexed documents, or other issues that could undermine ownership. Title insurance is typically issued as an owner’s policy for the purchaser (and often a separate lender’s policy for the loan), providing financial protection if a covered title defect surfaces later. Hazard or homeowners insurance, by contrast, covers damage to the property itself (fire, theft, weather, etc.) and is usually required by lenders to protect the collateral, not to verify or defend the title. Mortgage insurance protects the lender in case the borrower defaults, not the buyer’s title. So, for ensuring a clear, marketable title, obtaining a title insurance policy is the appropriate recommendation.

The key idea is protecting the buyer’s ownership rights. A title insurance policy is the protection buyers obtain to guard against losses from defects in the title that aren’t found in the public records before closing. These defects can include forged signatures, undisclosed heirs, outstanding liens, misindexed documents, or other issues that could undermine ownership. Title insurance is typically issued as an owner’s policy for the purchaser (and often a separate lender’s policy for the loan), providing financial protection if a covered title defect surfaces later.

Hazard or homeowners insurance, by contrast, covers damage to the property itself (fire, theft, weather, etc.) and is usually required by lenders to protect the collateral, not to verify or defend the title. Mortgage insurance protects the lender in case the borrower defaults, not the buyer’s title. So, for ensuring a clear, marketable title, obtaining a title insurance policy is the appropriate recommendation.