A lender would ask a borrower to provide which of the following as future protection against a loss due to title defect?

A lender would ask a borrower to provide which of the following as future protection against a loss due to title defect?

• A. A An abstract
• B. B An owner's title insurance policy
• C. C A mortgagee's title insurance policy
• D. D A vendor's affidavit

Answer: (B)

The correct answer is an owner's title insurance policy. This type of insurance provides protection to the borrower (the property owner) against potential title defects that could arise after the purchase of the property. These defects can include issues such as prior liens, fraud, or misrepresentations regarding ownership that were not disclosed during the transaction. By obtaining an owner's title insurance policy, the borrower ensures that they will be financially protected against legal claims that may emerge from these defects, which could lead to substantial financial loss. Essentially, if a title issue arises that affects the ownership rights, the insurance policy would cover legal costs and any losses incurred as a result. Considering the other options, an abstract serves as a summary of the title history but does not provide any protection against defects. A mortgagee's title insurance policy typically protects the lender's interests (not the borrower's) should a title defect uncover after closing. A vendor's affidavit is often used by sellers to affirm certain facts about the property but does not provide direct protection against title defects. Thus, the owner's title insurance policy is the best choice for ensuring future protection against title-related loss.

The correct answer is an owner's title insurance policy. This type of insurance provides protection to the borrower (the property owner) against potential title defects that could arise after the purchase of the property. These defects can include issues such as prior liens, fraud, or misrepresentations regarding ownership that were not disclosed during the transaction.

By obtaining an owner's title insurance policy, the borrower ensures that they will be financially protected against legal claims that may emerge from these defects, which could lead to substantial financial loss. Essentially, if a title issue arises that affects the ownership rights, the insurance policy would cover legal costs and any losses incurred as a result.

Considering the other options, an abstract serves as a summary of the title history but does not provide any protection against defects. A mortgagee's title insurance policy typically protects the lender's interests (not the borrower's) should a title defect uncover after closing. A vendor's affidavit is often used by sellers to affirm certain facts about the property but does not provide direct protection against title defects. Thus, the owner's title insurance policy is the best choice for ensuring future protection against title-related loss.