North Dakota Real Estate Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

Title insurance is a form of indemnity insurance that protects property buyers and mortgage lenders from losses related to defects or issues in a property’s title. This includes problems such as outstanding liens, fraudulent titles, or disputes over ownership. When a person purchases property, they want to ensure that they have clear ownership without risks of claims or disputes arising from previous owners or other parties that could affect their rights to the property.

In this context, selecting title insurance ensures that the buyer is financially protected if any title issues come to light after the purchase. This is important in real estate transactions, as discovering defects in the title can lead to significant financial loss or legal challenges.

The other choices do not accurately describe title insurance. Insurance against natural disasters is related to different types of insurance that cover physical damages, while insurance for personal property within a home pertains to homeowners or renters insurance. Insurance against foreclosure addresses different financial risks concerning the inability to repay a mortgage, rather than concerns pertaining to the title of a property itself.