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

A title defect is specifically defined as any issue that affects the legal ownership of a property. This can include various concerns such as liens, claims, or any other encumbrances that may impact the clear title of a property. For example, if there is an outstanding mortgage or a tax lien against the property, it creates a title defect because it can challenge the buyer's ability to claim clear ownership without obligations.

In contrast, issues related to the physical condition of a property, such as structural problems or maintenance concerns, do not directly impact legal ownership and therefore are not classified as title defects. Additionally, an increase in property value after renovation pertains to market trends and property improvements rather than ownership rights. Similarly, requirements for additional insurance coverage might arise from various factors, but they are separate from the legal validity of the title itself. Thus, option B accurately captures the essence of a title defect as it relates to legal ownership concerns.