What is a title insurance policy?

Prepare for the Maryland Land Title Examination. Utilize flashcards and multiple-choice questions, each accompanied by hints and explanations. Ensure your success on test day!

A title insurance policy is a contract that provides protection against losses resulting from defects in the title of real estate. This type of insurance safeguards property owners and lenders from issues such as unpaid liens, fraud, or errors in the public records that may arise after the purchase of a property.

The focus of title insurance is to ensure that the owner has clear ownership of the property and that no unforeseen claims can arise from previous owners, which could threaten their rights to the property. This is crucial because issues with the title can result in significant financial loss and legal complications.

In contrast to other options, such as those regarding home repair costs, warranties for building materials, or loan guarantees for property buyers, none address the unique aspect of insuring against title-related problems. Title insurance is specifically designed for protecting the financial investment in real property by ensuring that the title is free and clear from any legal disputes.

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