Marketable vs. insurable title

The old mortgage will be released

The title commitment shows the seller's mortgage as a requirement. Closing instructions direct a payoff and recording of a release from closing funds.

1. The commitment identifies a mortgage item and a planned payoff and release. Those instructions are not proof that payment or release has happened.
2. Full payment of the secured debt and clearing the public record are separate issues under the identified Illinois provisions.
3. Verify the actual payoff, authorized release, timing and contract and insurer requirements.

Answer: A timely completed payoff and required release can address the item. Do not treat an instruction or an unreleased record alone as proof of either an unpaid debt or finished cure.

The insurer excepts the driveway dispute

A commitment offers an owner's policy but lists a recorded driveway-boundary dispute in Schedule B as an exception. The sale contract promises marketable title without that exception.

1. The insurer is willing to issue a policy excluding the disputed matter.
2. The exception means the policy does not cover that risk.
3. Insurance availability alone does not satisfy a contract that did not require the buyer to accept the title dispute.

Answer: The title may be insurable on limited terms while still failing the contract's marketability promise unless cured or accepted.

The utility easement is permitted

The contract permits recorded utility easements that do not interfere with current residential use. The commitment lists an underground utility easement along the rear five feet, and the survey shows no use conflict.

1. The easement is an encumbrance, but the contract expressly permits that category subject to a use condition.
2. The stated facts show no interference with current use.
3. Marketable title does not mean title free from every permitted burden.

Answer: The permitted easement does not automatically make title unmarketable on these facts.

The lender policy does not insure the owner

At closing, the buyer pays a line item for a loan title policy naming only the mortgage lender. No owner's policy is issued.

1. The named insured and insured interest control coverage.
2. The loan policy protects the lender's mortgage interest.
3. The buyer's payment of a charge does not rewrite who is insured.

Answer: The lender is protected by the loan policy; the buyer does not receive owner's coverage from that policy alone.

An endorsement manages but does not erase risk

For this original teaching example, the title company actually agrees in a written endorsement to insure the buyer against specified loss from an old unreleased lien after receiving the required indemnity and escrow. The example supplies that underwriting acceptance; it does not say a deposit alone compels it.

1. The endorsement can supply affirmative coverage to the named insured under its terms.
2. The lien may still appear in the public record until released.
3. Coverage and cure answer different questions.

Answer: The insurer has managed specified loss risk, but the parties must separately analyze whether the contract allows that solution instead of record cure.

The broker should not issue a title opinion

A buyer asks the broker whether a missing probate deed makes title legally unmarketable and whether a Schedule B exception covers every possible loss.

1. Those questions require legal title and insurance-policy interpretation.
2. The broker can deliver the commitment and track the objection deadline.
3. The buyer's attorney and title insurer are the appropriate sources for legal and coverage conclusions.

Answer: The broker should communicate the issue promptly and refer the buyer rather than guarantee marketability or coverage.

A printed exception is not proof of an actual defect

A commitment contains a general exception for possible unrecorded rights. The buyer supplies no facts showing an adverse right actually exists and calls that wording alone proof of unmarketable title.

1. An exception describes the proposed coverage boundary.
2. It does not, by itself, establish the existence of the excepted matter.
3. Wilfong distinguishes speculative objections from supported title doubts; actual evidence can change the result.

Answer: Investigate the facts and contract rather than treating the printed exception alone as proof of a defect.

A recorded landmark restriction needs the actual contract

A purchaser agreed to take title subject to restrictions of record and later discovers a recorded landmark designation. The facts mirror the contract issue in Hachem.

1. The published case examined the agreed restrictions and record notice.
2. Its rejection of that particular seller claim did not decide that every landmark designation is or is not an encumbrance.
3. Different contract terms, facts or legal duties require their own analysis.

Answer: The lesson is to read accepted restrictions and the record, rather than assume every later use objection defeats the title promise.

Current titleholder and proposed insured are different entries

A teaching commitment identifies the seller as the current vested owner and the buyer as the proposed owner-policy insured. A separate loan policy is proposed for the buyer's mortgage lender.

1. The seller entry identifies current vesting.
2. The buyer and lender are proposed to receive protection for different stated interests.
3. Verify the names, estate or interest, requirements and actual issued terms rather than equating the entries.

Answer: Identify each role before deciding who has a covered claim.

The stated amount is not a claim decision

An owner policy states $300,000. Someone alleges a $40,000 title loss, but the facts do not identify the actual covered risk, exceptions or other claim conditions.

1. The two numbers identify an amount and an allegation.
2. They do not establish who is entitled to payment or whether the claim is covered.
3. Actual terms, covered loss and applicable limits remain to be examined.

Answer: Neither a $40,000 payment nor a $300,000 payment follows automatically from the supplied figures.

1. Which phrase best describes marketable title?

1. Title guaranteed to have no recorded document
2. Title reasonably free from serious doubt and probable litigation
3. Any title with an insurance exception
4. A lender's appraisal conclusion

2. What does Schedule B Part I of a title commitment generally list?

1. Loan payments
2. Covered furniture
3. Requirements
4. Broker duties

3. A commitment lists an easement in Schedule B Part II. What is the best interpretation?

1. The buyer owns the easement holder
2. The deed is unnecessary
3. The easement has been released automatically
4. The policy will except that matter unless the final terms change

4. Which policy primarily protects the mortgage lender's insured lien interest?

1. Loan policy
2. Hazard policy
3. Owner's policy
4. Home warranty

5. What is the key difference between curing and insuring over a title issue?

1. Insuring over records the deed automatically
2. Cure resolves the issue, while insuring over accepts specified loss risk
3. Cure protects only furniture
4. They are always identical

6. An insurer will issue a policy that excepts the disputed driveway claim. The contract does not permit that dispute. What follows from the offer alone?

1. The buyer must close under every contract
2. The lender owns the driveway
3. Neither coverage for that dispute nor contract compliance is established
4. The dispute is automatically released

7. A general exception mentions possible unrecorded interests, but no adverse interest is shown. Does that wording alone prove unmarketability?

1. Yes, all printed possibilities are established liens
2. Yes, every exception proves an actual defect
3. Only the premium decides
4. No; distinguish the coverage limitation from evidence that a defect exists

8. What should be checked before assuming a recorded utility easement violates the title promise?

1. Only the word recorded
2. Only the easement's age
3. Whether the buyer later dislikes utilities
4. The contract's permitted category and any use condition, plus the actual facts

9. A buyer pays the premium for a loan policy naming only the lender. Who gains owner coverage from that payment alone?

1. Every later occupant
2. The buyer automatically
3. Both parties automatically under identical coverage
4. No owner coverage is established by that payment alone

10. The commitment requires a mortgage release. Has the release necessarily occurred?

1. Yes, every listed requirement is already complete
2. Yes, the requirement itself records the release
3. No; it identifies work or evidence still required under the proposed terms
4. Only the color of the document decides

11. Does full secured-debt payment and removal of the mortgage from the public record mean exactly the same thing?

1. No; legal lien extinguishment and the record-release steps are distinct
2. Yes, a record entry alone proves payment
3. Only the lender's logo matters
4. Yes, no release process can remain

12. A covered-risk heading sounds broad. What else must be read?

1. The named interest, exceptions, exclusions, conditions, limits and endorsements
2. Nothing else if the page says title insurance
3. Only the premium receipt
4. Only the property's paint color

13. Does a pro forma policy alone establish that insurance has been issued?

1. Only if it is printed in color
2. No; it illustrates proposed terms and is a different document
3. Yes, it replaces all commitment requirements
4. Yes, every sample is binding issued coverage

14. Which statement best describes a title search?

1. It automatically conveys title
2. It gathers title evidence and is distinct from insurance
3. It pays every later loss
4. It guarantees all off-record claims are absent

15. Does the Illinois statutory definition make every attorney title opinion title insurance?

1. Yes, every legal opinion is an insurance policy
2. No; the identified definition separates the attorney opinion and instrument warranties from title insurance
3. Only if a buyer reads it
4. Yes, the words title make all products identical

16. An insurer gives a specified endorsement for an old lien. What contract question remains?

1. Whether the agreed title standard accepts that solution instead of the required cure
2. Whether all owners have identical policy amounts
3. Whether an endorsement automatically signs a new sale agreement
4. Whether every recorded lien disappears

17. A buyer dislikes a restriction expressly accepted under the contract. Is dislike alone a new title defect?

1. Only if the buyer paid cash
2. No; read the accepted terms and any applicable conditions or other duties
3. Always
4. Yes, preferences automatically cancel every contract

18. What recording shortcut should be avoided in Illinois?

1. Read the notice conditions
2. Separate delivery from recording
3. The first instrument recorded always wins, whatever the notice or validity facts
4. Check the actual instrument

19. A title policy is available. Does that establish that the roof is sound or the property will rise in value?

1. No; title protection, condition and economic performance are different issues
2. Only if a mortgage exists
3. Yes, title quality and physical quality are identical
4. Yes, both are guaranteed

20. Which deadline should a broker use when coordinating a title objection?

1. Whatever date is easiest to remember
2. The actual contract's process and applicable requirements
3. A universal deadline invented by this lesson
4. No deadline if a policy is available

21. For a covered Illinois residential sale, who does Section 18.1 identify as having the title company and agent choice?

1. The party obligated to furnish and pay for the insurance at that party's expense
2. Always the lender, regardless of the statute
3. Always the buyer, regardless of who must pay
4. Always the broker

22. Does closing protection simply duplicate every owner-title-policy risk?

1. Yes, they are the same product
2. Yes, both guarantee all physical repairs
3. Only the title of the document matters
4. No; closing protection addresses specified settlement-related conduct under its own terms and applicable provisions

23. The Hachem contract allowed restrictions of record. What is the sound lesson from the identified decision?

1. All seller disclosures are abolished
2. Every insurance claim was decided on its merits on appeal
3. Read the accepted restrictions and record notice, with the case's actual limits
4. Every landmark designation is harmless everywhere

24. What best checks your understanding after a wrong title answer?

1. Treat a practice percentage as an exam guarantee
2. Name the contract promise, actual issue, proposed coverage and insured interest, then change one fact
3. Ignore the exceptions
4. Memorize only a displayed answer letter

25. A commitment names the seller as currently vested owner and the buyer as proposed insured. Which reading is sound?

1. Both entries prove every occupant is insured
2. They identify different roles; verify the actual names, estate or interest and issued terms
3. The seller must always remain the only insured
4. Current vesting automatically supplies a loan policy

26. An owner policy states $300,000. A person asserts a $40,000 title loss. What can those two figures alone establish?

1. That the property must have appreciated by $40,000
2. Neither coverage nor the payable amount; the actual terms and covered loss still matter
3. An automatic $40,000 payment
4. An automatic $300,000 payment

27. The final policy deletes one identified exception. Does that alone mean every other title and property risk is covered?

1. Only if the buyer paid cash
2. No; the remaining terms and actual changed protection still need to be read
3. Yes, all conditions disappear
4. Yes, all physical repairs are then guaranteed

28. What does calling a title problem unmarketability establish about a decline in resale price?

1. Nothing automatic; title quality and economic market value are different questions
2. Every price decline is insured title loss
3. The contract price can never change
4. The insurer guarantees all appreciation