MBE Rules · Real Property
Title Insurance
Title insurance
The rule
An owner's policy indemnifies against record defects existing at closing, subject to exceptions and exclusions; it protects only the insured (not successors) and does not run with the land.
In plain English
Title insurance provides protection to property owners against defects in the title that may exist at the time of closing. However, this protection is limited to the original insured party and does not extend to future owners of the property.
Worked example
Jane purchases a home and obtains a title insurance policy at closing. Later, she discovers a lien against the property that was not disclosed before the sale. Since the lien existed at closing and is covered by her policy, Jane can file a claim and be indemnified for the loss.
Memory hook
Title insurance protects you, but only you—no pass-along to future owners!
The trap
Exams often include scenarios where students mistakenly believe title insurance protects future owners or that it covers all defects without exceptions.
How examiners test it
Questions typically present a fact pattern involving undisclosed defects and ask about the rights of the insured versus successors, testing understanding of the policy's limitations.
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