Maine Real Estate License Practice Exam

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Who would need a new owner's title insurance policy when purchasing a property?

The mortgagee
The buyer
The seller
The licensee

The correct answer is: The buyer

A new owner's title insurance policy is essential for the buyer when purchasing a property. This type of insurance protects the buyer against any future claims or issues related to the title of the property that may not have been discovered during the title search process. It provides peace of mind by safeguarding the buyer's investment from potential disputes over ownership, liens, or other encumbrances that could arise after the sale has been completed. The policy is typically a one-time premium payment and stays in effect for as long as the buyer or their heirs own the property, ensuring that they are financially protected against unforeseen legal challenges regarding the title. In contrast, the mortgagee, or lender, would require a different type of policy known as mortgagee title insurance, which protects their investment, but does not provide coverage for the buyer. The seller does not need an owner's title insurance policy, as they are transferring their rights to the property. The licensee, or real estate agent, does not require such coverage in relation to the transaction itself.