Wisconsin Real Estate Sales Practice Exam

How does title insurance provide evidence of title?

1. By conducting a home inspection

2. Searching public records and submitting a report

3. Through an appraisal report

4. By receiving a warranty deed

The correct answer is: Searching public records and submitting a report

Title insurance provides evidence of title primarily through the searching of public records and submitting a report. This process involves a thorough investigation of historical property records, which includes examining deeds, mortgages, liens, and other documents related to the ownership and encumbrances on the property. This comprehensive search is pivotal because it helps uncover any potential issues or claims against the title that could affect ownership. The resulting report from this search serves as a foundational piece of evidence that assures stakeholders of the property's title status. It identifies current owners, verifies legal ownership, and reveals any discrepancies in the title. This proactive approach helps to mitigate risks associated with title defects, ensuring that the property can be transferred without legal complications. Home inspections focus on the physical condition of the property, appraisals determine its market value, and warranty deeds are documents that provide assurances about the property title but do not themselves form the basis of evaluating title claims or issues. Thus, the strategy of searching public records is crucial for establishing clear and marketable title, which is a critical component of real estate transactions.