Texas Surveyors Practice Exam

What does a title insurance policy not cover?

1. Public record documents

2. Matters disclosed by a survey

3. Errors due to title transfer

4. Deficiencies in the property description

The correct answer is: Matters disclosed by a survey

A title insurance policy is designed to protect property owners and lenders from potential losses arising from defects in the title to real estate. However, it has certain limitations in its coverage. The reasoning behind the answer lies in the nature of what is typically excluded from a title insurance policy. Matters disclosed by a survey, such as boundary lines, encroachments, or easements, are often not covered because these issues are considered external and can be identified through a proper survey before the purchase. Surveyors provide information regarding the physical property and its boundaries, which can expose potential title issues that the title insurance would not be liable for. On the other hand, public record documents are generally covered by the title policy, as they are part of the title's legal background. Errors due to title transfer, which encompass mistakes made during the conveyancing process, are also covered because they can lead to disputes about ownership. Finally, deficiencies in the property description can result in significant issues with the title and are usually covered under title insurance. Understanding this distinction is crucial for those involved in real estate transactions, highlighting the role of surveys in identifying potential issues that title insurance does not address.