Which statement about title policies is false?

Which statement about title policies is false?

• A. Title insurance protects against title defects; lender's policy ensures lender's lien priority; owner's policy protects buyer's equity.
• B. Title insurance cannot guarantee there will never be any future title issues.
• C. A title policy covers both known defects and unknown risks.
• D. A title policy is only available for commercial properties.

Answer: (D)

Title policies protect against defects that affect the marketability of title and place the risk of those defects on the insurer, not on the buyer after closing. There are two main policies: a lender’s policy, which protects the lender’s interest and ensures the lender’s lien priority, and an owner’s policy, which protects the buyer’s equity in the property. These policies don’t guarantee there will never be any future title issues; they cover problems that existed at or before the policy date and can address unknown risks discovered later, subject to the policy’s terms. They are not limited to commercial properties; residential title insurance is common as well. The statement that a title policy is available only for commercial properties is incorrect.

Title policies protect against defects that affect the marketability of title and place the risk of those defects on the insurer, not on the buyer after closing. There are two main policies: a lender’s policy, which protects the lender’s interest and ensures the lender’s lien priority, and an owner’s policy, which protects the buyer’s equity in the property. These policies don’t guarantee there will never be any future title issues; they cover problems that existed at or before the policy date and can address unknown risks discovered later, subject to the policy’s terms. They are not limited to commercial properties; residential title insurance is common as well. The statement that a title policy is available only for commercial properties is incorrect.