Missouri Title Producer Exam Title Insurance Terms | Questions & Answers (100 %Score)
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Title Insurance - 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 - 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 - 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 - 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 - 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 - 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 - 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 and/or owners when erecting an improvement and may be generally settled by an
action at law. However, courts of equity will entertain a bill for the settlement of boundaries when the
rights may be established upon equitable rounds. Encroachments my be corrected by giving or selling he
encroaching party an easement or lease for the lifetime of the of the building, or in the case of small
structures, actually moving it onto the owners own property.
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