What is the exam-ready answer?
| Official syllabus topic | Title Searches, Title Insurance, and Title Problems |
|---|---|
| Official PSI area | Transfer of Title |
| Published area weight | 6% of the 100-question national portion |
| Exam portion | National salesperson portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes the weight for the complete content area, not a fixed question count for this lesson. Learn the rule well enough to apply it when PSI changes names, numbers, or parties in a new scenario.
The lesson
These ideas work together. On the exam, the wrong answers usually describe a nearby concept, so learn where each one stops.
Search and chain
Searchers trace deeds, liens, judgments, probate, marital interests, taxes, easements, restrictions, and other indexed matters to identify the chain and unresolved claims.
Clouds and cures
Errors, unreleased liens, inconsistent names, missing heirs, forged instruments, boundary claims, or recording gaps may require a release, corrective deed, affidavit, probate action, quiet-title case, or other legal cure.
Owner and lender policies
An owner's policy protects the insured owner's covered interest, while a lender's policy protects the insured lender's security interest. A lender policy does not substitute for owner coverage.
Coverage limits
A commitment states proposed coverage requirements and exceptions; it is not the final policy. Survey matters, known defects, governmental rules, and post-policy events may be excepted or excluded depending on terms and endorsements.
Decision rule
Georgia-specific distinction
Worked example
Scenario. A lender requires a lender's title policy, and the buyer assumes that policy protects the buyer's equity.
Reason it through. The required policy insures the lender's security interest, not automatically the owner's separate loss.
Answer. The buyer should evaluate a separate owner's policy and its terms.
Common exam traps
- Calling a title search insurance
- Assuming lender coverage protects owner equity
- Treating a commitment as the final policy
- Assuming title insurance covers building defects
Original practice questions with detailed explanations
These questions were written for instruction and mapped to the current outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1A buyer's lender requires a lender's title policy, and the buyer skips an owner's policy, thinking the lender's policy covers the buyer too. If a covered title defect appears later, whose interest does the lender's policy protect?
- A. Only the lender's security interest
- B. The buyer's equity and the lender's loan
- C. The buyer's equity, up to the price paid
- D. The seller's interest until the loan is paid
Show answer and explanation →
Answer: A. Only the lender's security interest
A lender's policy insures the lender's security interest, not the owner's separate equity. A buyer who wants that equity protected needs an owner's policy, so assuming the lender's policy protects both is the trap.
Question 2A title search finds a 2012 security deed from a prior owner with no recorded cancellation, even though that loan was paid off. What is this?
- A. An encroachment on the lot
- B. A survey exception
- C. A cloud on title
- D. A restrictive covenant
Show answer and explanation →
Answer: C. A cloud on title
A cloud is an apparent claim or defect that can impair title, and an unreleased security deed is a classic example, usually cured by obtaining and recording a release. An encroachment is a physical intrusion onto the land, not a problem in the records.
Question 3Two months after closing, the buyer's roof starts leaking, and the buyer files a claim on the owner's title policy. Will the policy pay?
- A. Yes, because the policy covers the whole property
- B. No, title insurance covers title risks, not condition
- C. Yes, if the leak began before the policy date
- D. No, because only the lender's policy covers the roof
Show answer and explanation →
Answer: B. No, title insurance covers title risks, not condition
Title insurance protects against covered title risks, subject to its exceptions, exclusions, and conditions. It is not a home warranty, so a roof leak falls outside it even if the problem existed at closing. The "before the policy date" answer borrows a timing idea from title defects and wrongly applies it to property condition.
Ready to move on?
You are ready for the next lesson when all of these are true.
- Explain Title Searches, Title Insurance, and Title Problems in one clear answer without notes.
- Separate Search and chain from Clouds and cures using a fresh example.
- Apply the decision rule to a new fact pattern and name the fact that controls the result.
- State the Georgia-specific point or explain why the national rule applies unchanged.
- Answer every practice question and explain the rule each rejected option misapplies.
- Revisit this topic later in mixed practice without category labels.
Recommended next lesson
Continue with Marketable Title Versus Insurable Title. Next, marketable versus insurable title asks what happens when a search turns up a defect that an insurer will cover only by exception while the purchase contract still requires the seller to cure it.
Return to the Transfer of Title hub to see every official branch and the complete lesson sequence for this content area.