New Jersey Real Estate Practice Exam Free Practice Question
Title insurance guarantees that
Correct Answer: D
Rationale: Title insurance serves to protect buyers and lenders from legal issues related to the ownership of a property. Option D accurately reflects this, as it ensures protection against title actions stemming from recorded liens, which can affect ownership rights.
Option A is misleading; title insurance does not guarantee the absence of encumbrances but rather protects against losses from them. Option B incorrectly suggests that title insurance involves holding the title, which is not its purpose; title insurance focuses on protecting ownership rights. Option C misrepresents the scope of coverage, as it primarily addresses recorded encumbrances, not unrecorded ones.
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