Affiliate Broker Tennessee (TN PSI) National Practice Exam `

What does it mean if Ashish is offered insurable, but not marketable, title?

1. The title is completely clear

2. The title has known defects but can be insured

3. The title has no restrictions

4. The title is currently non-transferable

The correct answer is: The title has known defects but can be insured

When a title is described as insurable but not marketable, it indicates that although the title is subject to certain defects or issues, an insurance company is willing to issue a policy to cover potential losses arising from those defects. This means that while the title may have known problems—such as encumbrances, liens, or claims from other parties that could complicate the ownership—it is still considered acceptable for the insurance industry. In this situation, the title is not marketable because it cannot be sold or transferred without the risk of these known defects causing legal or financial problems. Buyers or lenders may be hesitant to proceed with a property that has a title that cannot be marketed effectively due to these issues. Therefore, the key aspect here is the distinction between insurable and marketable, where the title has defects recognized by the insurance provider but still offers some level of protection to the owner.