Oregon 30-Hour Real Estate Law Practice Test

Title insurance typically covers which of the following claims?

1. Claims for property damage

2. Claims regarding past tenants, if public record exists

3. Claims related to environmental issues

4. Claims for future property value declines

The correct answer is: Claims regarding past tenants, if public record exists

Title insurance is designed to protect property owners and mortgage lenders from financial loss due to defects in a property's title. This includes issues that may arise from past ownership or any claims against the property that exist in public records. When it comes to claims regarding past tenants, title insurance can cover issues that are related to claims arising from previous owners or tenants, provided that these claims are recorded in the public record. For instance, if a prior tenant has a claim to the property based on an unresolved issue or a lien that went unaddressed, title insurance will protect the policyholder from financial loss resulting from such claims. This is a critical aspect of title insurance, as it ensures that buyers and lenders can rely on the integrity of the title prior to concluding a transaction. On the other hand, claims for property damage, environmental issues, and future property value declines do not align with the purpose of title insurance. Property damage typically falls under homeowners insurance or specific liability coverage. Environmental claims often involve different types of insurance and are not typically covered by title insurance. Future property value declines cannot be foreseen and are not an insurable risk under title policies. Thus, among the listed options, claims regarding past tenants in the context of public records are valid scenarios where title