Alabama Title Insurance Exam Verified
Questions, Correct Answers, and Detailed
Explanations for Students||Already
Graded A+
1. What is the primary purpose of title insurance?
A) To provide property appraisal
B) To protect against defects in title
C) To insure the physical structure
D) To guarantee property value
Title insurance protects the owner or lender from losses due to title defects or
disputes.
2. Who typically purchases title insurance in Alabama?
A) Lender only
B) Borrower only
C) Both lender and property owner
D) Real estate agent
Both lenders and owners can purchase title insurance; the lender’s policy
protects the loan, while the owner’s protects property ownership.
3. Which of the following is a common exception in a title insurance policy?
A) Unpaid taxes
B) Easements and rights-of-way
C) Fire damage
D) Flood risk
Title insurance often excludes known easements or rights-of-way recorded in
public records.
4. What is a “chain of title”?
A) A type of insurance policy
B) The history of property ownership
C) A mortgage lien
D) A foreclosure notice
Chain of title shows the sequence of ownership transfers for a property.
,5. Which of these is a common requirement before issuing a title insurance
policy?
A) Home inspection
B) Title search
C) Appraisal
D) Survey report
A title search identifies defects, liens, or claims on the property.
6. In Alabama, the standard title insurance policy is called:
A) Homeowner’s Policy
B) Lender’s Policy
C) ALTA Owner’s Policy
D) Real Estate Policy
ALTA (American Land Title Association) provides standardized title insurance
forms widely used in Alabama.
7. Which of the following is NOT covered by a standard title insurance policy?
A) Forged documents
B) Physical damage to the property
C) Undisclosed liens
D) Errors in public records
Title insurance covers legal claims, not physical damages to property.
8. Who pays for title insurance in Alabama?
A) Buyer only
B) Seller only
C) Negotiable between buyer and seller
D) Lender only
Payment for title insurance is usually negotiated between parties or may be
required by lenders.
9. A “lien” refers to:
A) Property boundary line
B) Insurance premium
C) A legal claim on property for debt
D) Property tax refund
A lien gives a creditor the right to take property if a debt is unpaid.
, 10. What is an easement?
A) A type of lien
B) A legal right to use another’s property
C) A mortgage clause
D) A tax exemption
Easements allow use of another’s land for a specific purpose, like utility lines.
11. What type of title insurance policy is required by most lenders?
A) Owner’s Policy
B) Lender’s Policy
C) Endorsement Policy
D) Home Warranty
Lender’s policies protect the lender’s interest in the property.
12. Which of the following might a title search uncover?
A) Existing mortgages
B) Judgments
C) Unpaid taxes
D) All of the above
A thorough title search reveals mortgages, liens, and tax issues.
13. Which term describes a document transferring property ownership?
A) Lease
B) Deed
C) Mortgage
D) Lien
A deed conveys ownership from one party to another.
14. Which deed provides the greatest protection to a buyer?
A) Quitclaim Deed
B) Bargain and Sale Deed
C) Warranty Deed
D) Grant Deed
A warranty deed guarantees the seller has clear title and defends against
claims.
15. What is “title defect”?
Questions, Correct Answers, and Detailed
Explanations for Students||Already
Graded A+
1. What is the primary purpose of title insurance?
A) To provide property appraisal
B) To protect against defects in title
C) To insure the physical structure
D) To guarantee property value
Title insurance protects the owner or lender from losses due to title defects or
disputes.
2. Who typically purchases title insurance in Alabama?
A) Lender only
B) Borrower only
C) Both lender and property owner
D) Real estate agent
Both lenders and owners can purchase title insurance; the lender’s policy
protects the loan, while the owner’s protects property ownership.
3. Which of the following is a common exception in a title insurance policy?
A) Unpaid taxes
B) Easements and rights-of-way
C) Fire damage
D) Flood risk
Title insurance often excludes known easements or rights-of-way recorded in
public records.
4. What is a “chain of title”?
A) A type of insurance policy
B) The history of property ownership
C) A mortgage lien
D) A foreclosure notice
Chain of title shows the sequence of ownership transfers for a property.
,5. Which of these is a common requirement before issuing a title insurance
policy?
A) Home inspection
B) Title search
C) Appraisal
D) Survey report
A title search identifies defects, liens, or claims on the property.
6. In Alabama, the standard title insurance policy is called:
A) Homeowner’s Policy
B) Lender’s Policy
C) ALTA Owner’s Policy
D) Real Estate Policy
ALTA (American Land Title Association) provides standardized title insurance
forms widely used in Alabama.
7. Which of the following is NOT covered by a standard title insurance policy?
A) Forged documents
B) Physical damage to the property
C) Undisclosed liens
D) Errors in public records
Title insurance covers legal claims, not physical damages to property.
8. Who pays for title insurance in Alabama?
A) Buyer only
B) Seller only
C) Negotiable between buyer and seller
D) Lender only
Payment for title insurance is usually negotiated between parties or may be
required by lenders.
9. A “lien” refers to:
A) Property boundary line
B) Insurance premium
C) A legal claim on property for debt
D) Property tax refund
A lien gives a creditor the right to take property if a debt is unpaid.
, 10. What is an easement?
A) A type of lien
B) A legal right to use another’s property
C) A mortgage clause
D) A tax exemption
Easements allow use of another’s land for a specific purpose, like utility lines.
11. What type of title insurance policy is required by most lenders?
A) Owner’s Policy
B) Lender’s Policy
C) Endorsement Policy
D) Home Warranty
Lender’s policies protect the lender’s interest in the property.
12. Which of the following might a title search uncover?
A) Existing mortgages
B) Judgments
C) Unpaid taxes
D) All of the above
A thorough title search reveals mortgages, liens, and tax issues.
13. Which term describes a document transferring property ownership?
A) Lease
B) Deed
C) Mortgage
D) Lien
A deed conveys ownership from one party to another.
14. Which deed provides the greatest protection to a buyer?
A) Quitclaim Deed
B) Bargain and Sale Deed
C) Warranty Deed
D) Grant Deed
A warranty deed guarantees the seller has clear title and defends against
claims.
15. What is “title defect”?
