American Land Title Association (ALTA) Practice Exam 2025 – Your Comprehensive All-in-One Guide to Success!

An "insurable title" is defined as a title that is free of defects that would prevent the issuance of title insurance. This means that the title must be clear of issues that could potentially disrupt ownership or diminish the value of the property. An insurable title assures the buyer and lender that they will be protected against any unforeseen defects that could arise, thus allowing title insurance to be issued confidently.

In practical terms, this involves ensuring that there are no outstanding liens, claims, or legal impediments that could impact the title's validity. This distinction is crucial because it protects all parties involved from possible financial loss or disputes related to property ownership.

Other options present scenarios that may pose challenges or complications to title insurance. While a title with minor defects might still be insurable under certain circumstances, it does not provide the same assurance as a completely clean title. Legal restrictions on property use and the risk of litigation could also complicate the ability to issue title insurance, making these titles ineligible for coverage because they create uncertainties about the usage rights or ownership claims. Therefore, the definition of an insurable title hinges on its freedom from threats that could jeopardize the integrity of the titles being insured.