An examination of public records to verify a seller's legal ownership and identify any liens or claims.
Why Title Search matters on the exam
This term belongs to Transfer of Title. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Title Search
Every Freehold question shows why the right answer is right — and cites its source.
Which four elements must generally be present for a contract to be valid?
Offer and acceptance, earnest money, a notary, and a legal description
Consideration, a real estate license, a survey, and a title search
Legally competent parties, a recorded deed, consideration, and witnesses
Offer and acceptance, consideration, legally competent parties, and legal purpose
Show answer & explanation
Offer and acceptance, consideration, legally competent parties, and legal purpose — The four essential elements of a valid contract are mutual assent (offer and acceptance), consideration, legally competent parties, and a lawful objective; items like notarization or recording are not required for validity.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
The primary reason a lender requires an appraisal contingency is that:
Lenders will not loan more than the property's appraised value supports
Appraisals determine the buyer's credit score
Sellers are legally required to pay for appraisals
Appraisals replace the need for a title search
Show answer & explanation
Lenders will not loan more than the property's appraised value supports — Lenders base loan amounts on the lesser of the sale price or the appraised value, so an appraisal contingency protects the buyer if the loan amount is reduced because the home appraises below the contract price.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
A buyer objects to a title defect discovered during a title search, and the contract gives the seller 30 days to cure the defect before the buyer may declare a default. On day 15, the buyer immediately declares the seller in default and refuses to close. This buyer action is most likely:
Required because time is always of the essence for title issues
Proper because any title defect is automatically a default
Irrelevant because title defects can never be cured
Premature
Show answer & explanation
Premature — Where the contract grants the seller a specific period to cure a title defect, declaring default before that cure period expires is premature and may itself expose the buyer to liability for breaching prematurely.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
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