What is the primary purpose of title insurance in residential real estate transactions?
Correct Answer
D) To protect against title defects and ownership issues
Title insurance protects property owners and lenders against losses from title defects, liens, encroachments, and other ownership issues that may not be discovered during the title search. It provides financial protection and legal defense if title problems arise.
Why This Is the Correct Answer
Option D is correct because title insurance specifically protects against title defects and ownership issues that could threaten clear ownership of the property. This includes protection against fraud, forgery, unregistered liens, survey errors, municipal compliance issues, and other title-related problems. The insurance provides financial compensation for losses and covers legal costs to defend ownership rights. This aligns with the fundamental purpose of title insurance as defined in Canadian real estate practice and provincial regulations governing real estate transactions.
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