Missouri Title Producer Exam Title Insurance Terms Questions and Answers

Title Insurance - ANSWER-Insured statement of the condition of title or ownership of real property. One-time only premium. Named insured and heirs protected against title defects, liens and encumbrances as of the date of policy. Commitment/Binder - ANSWER-A binding contract with a title company to issue a specific title policy, showing only those exceptions contained in the commitment and any intervening matters after the date of the commitment and prior to the effective date of the policy. Contains all information included in the preliminary title report, plus a list of requirements to insure the transaction and standard exceptions from coverage that will appear in the policy. Endorsement - ANSWER-An addition to or modification of a title insurance policy which expands or changes coverage of the policy fulfilling specific requirements of the insured. Exception - ANSWER-A provision in a title insurance binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance, such as easements and restrictions. Requirements - ANSWER-Conditions in a title insurance binder that must be met or otherwise cleared before title can be insured and a policy can be issued. Encumbrance - ANSWER-Anything which affects or limits the fee simple title to property, such as mortgages, easements or restriction which do not prevent alienation of the fee title by the owner. Liens are special encumbrances which make the property security for the debt. Encroachment - ANSWER-The situation that exists when a structure is built in whole or part on a neighbors property. Disputes arising from a confusion of boundaries may be the result of incorrect surveys, or mistakes by builders