Affiliate Broker Tennessee (TN PSI) National Practice Exam `

What type of agreement is excluded from a title insurance policy due to the schedule of exceptions?

1. Written lease agreement

2. Verbal lease agreement

3. Purchase agreement

4. Home warranty agreement

The correct answer is: Verbal lease agreement

A verbal lease agreement is typically excluded from a title insurance policy due to the schedule of exceptions because title insurance primarily covers claims against the title that arise from legal interests recorded in public records. Since verbal agreements are not documented or formalized in writing, they lack the necessary legal standing that would allow them to be protected under title insurance. In contrast, written lease agreements, purchase agreements, and home warranty agreements are documented and can establish legal rights that are recognized in property law. The title insurance policy is designed to protect against risks that may not be revealed through public records, but it relies on formal written contracts to ascertain rights. Therefore, any agreement that is not documented, such as a verbal lease, falls outside the purview of what title insurance can cover.