Humber/Ontario Real Estate Course 4 Exam Practice

Which of the following might be covered under title insurance for a new buyer of a resale property?

1. The seller did not get municipal approval for an extension added to the home.

2. The buyer did not pay the insurance premium, resulting in cancellation of the fire insurance policy.

3. The buyer is unable to make mortgage payments due to illness.

4. The buyer requires a right-of-way over an adjoining property for easier access to the rear yard.

5. The buyer discovers the property has a history of flooding.

6. The seller defaulted on past property taxes.

The correct answer is: The seller did not get municipal approval for an extension added to the home.

The correct choice regarding title insurance coverage for a new buyer of a resale property is that the seller did not obtain municipal approval for an extension added to the home. Title insurance is designed to protect buyers from certain risks associated with property ownership, including issues related to title defects. One such risk is that alterations made to a property may not have been properly approved by the local municipality. If this issue arises after the purchase, it could lead to legal disputes or financial burdens for the buyer, which title insurance would cover. Options that pertain to the buyer's situation, such as the inability to make mortgage payments due to illness, non-payment of insurance premiums, or the buyer needing access to neighboring properties, typically fall outside the scope of title insurance. Those situations pertain more to personal financial or property use conditions rather than defects or legal issues concerning the title itself. Additionally, problems that might have historical implications, such as a flooding history of the property, are also generally not covered under typical title insurance policies. Past issues related to property taxes that the seller defaulted on can sometimes present problems but usually have specific ways of being addressed in real estate transactions and might not lead to direct title disputes.