Real Estate Real Estate Law & Regulations 2

Question 1

What distinguishes lender's title insurance from owner's title insurance?

Accepted Answer

Lender's policy covers only the loan amount and decreases as the loan is paid down; owner's policy covers the full property value

Answer

Lender's policy protects the buyer's equity; owner's policy protects only the mortgage

Answer

They cover the same risks but different parties

Answer

Only owner's title insurance is required by law

Question 2

A cloud on title refers to:

Accepted Answer

Any outstanding claim, lien, or encumbrance that may impair the owner's clear title

Answer

A property located in a flood zone

Answer

Digital title records stored online

Answer

Undisclosed easements only

Question 3

Under a race-notice recording statute, a subsequent purchaser is protected if they:

Accepted Answer

Record first AND had no notice of prior unrecorded interests at the time of purchase

Answer

Record first regardless of knowledge of prior interests

Answer

Simply pay fair market value

Answer

File with the court within 30 days

Question 4

A lis pendens is a recorded notice that:

Accepted Answer

Provides public notice that the property is subject to pending litigation

Answer

Indicates a property is for sale

Answer

Creates a tax lien on the property

Answer

Transfers title during probate

Question 5

A mechanic's lien can be filed by a:

Accepted Answer

Contractor, subcontractor, or supplier who performed work or supplied materials for the property

Answer

Mortgage lender only

Answer

Property appraiser

Answer

Real estate agent for unpaid commission

Question 6

A short sale occurs when the property sells for:

Accepted Answer

Less than the outstanding mortgage balance, with lender approval

Answer

Less than the asking price after a price reduction

Answer

Quickly within 30 days of listing

Answer

Under assessed value for tax purposes