The scenario describes a situation involving a potential boundary dispute and a cloud on the title due to the unrecorded survey. Standard title insurance policies typically exclude coverage for matters that would be revealed by an accurate survey, unless that survey is actually recorded in the public records. Because the survey exists but was never recorded, it creates a known risk that the title insurer might not have fully assessed when issuing the policy. In North Carolina, title insurers are expected to conduct thorough title searches, but they generally rely on recorded documents. The existence of an unrecorded survey complicates the risk assessment. If the boundary dispute arises, the title insurer might deny coverage, citing the survey exception and the fact that the survey, though existing, wasn’t part of the public record they relied upon. Therefore, it is most likely that the title insurer will deny the claim based on the survey exception, because the survey was not recorded and the title insurer’s risk assessment was based on recorded documents. The title insurer is likely to argue that the unrecorded survey represents a known risk that was not disclosed, and that the standard policy excludes matters that would have been revealed by an accurate, recorded survey.

In North Carolina, a title insurance producer acting as an independent contractor has specific ethical and legal responsibilities concerning the disclosure of potential conflicts of interest. These responsibilities are primarily governed by North Carolina insurance regulations and ethical standards applicable to licensed professionals. A conflict of interest arises when the producer’s personal, financial, or business interests could potentially compromise their impartiality or objectivity in serving the client’s best interests. The producer must proactively disclose any such conflicts to all parties involved in the transaction, including the buyer, seller, lender, and any other relevant stakeholders. This disclosure must be clear, conspicuous, and provided in writing to ensure transparency and informed consent. The disclosure should outline the nature of the conflict, the potential impact on the transaction, and the steps the producer is taking to mitigate any adverse effects. Failure to disclose a conflict of interest can result in disciplinary action by the North Carolina Department of Insurance, including fines, suspension, or revocation of the producer’s license. Furthermore, the producer may be subject to legal liability for breach of fiduciary duty or misrepresentation. The goal is to ensure that all parties are fully aware of any potential biases or influences that could affect the producer’s recommendations or actions, allowing them to make informed decisions about the transaction.

To calculate the simultaneous impact of both the lien and easement on the property value, we must consider their combined effect. First, calculate the impact of the mechanic’s lien. The lien is for \$25,000, but because title insurance only covers losses up to the policy amount, the maximum insurable loss from the lien is \$25,000. Next, calculate the impact of the easement. The easement reduces the property value by 15%. The original market value of the property is \$250,000. The reduction in value due to the easement is calculated as \(0.15 \times \$250,000 = \$37,500\). The total loss covered by the title insurance policy is the sum of the insurable loss from the mechanic’s lien and the reduction in value due to the easement. Therefore, the total loss is \(\$25,000 + \$37,500 = \$62,500\). The deductible does not apply here as the loss is greater than the deductible. Finally, we need to consider the policy limit. Because the total loss of \$62,500 is less than the policy limit of \$275,000, the title insurance company will cover the entire loss.

In North Carolina, the Conner Act mandates that certain real estate documents, including deeds, mortgages, and leases exceeding three years, must be recorded to be valid against third parties. This protects subsequent purchasers for value who are unaware of prior unrecorded conveyances. Therefore, if a title search fails to reveal a previously executed deed due to its non-recordation, a title insurance policy protects the insured against claims arising from that unrecorded deed. The policy insures against losses resulting from defects in title, including those arising from unrecorded instruments that could have been discovered with a proper title search, but were not because of the non-recordation. The protection afforded by title insurance is contingent on the policy’s terms, conditions, and exclusions, but generally covers losses up to the policy amount due to title defects.

The core issue revolves around the concept of “marketable title” versus “insurable title.” While a title insurance company might be willing to insure a title (insurable title) despite certain known defects, it doesn’t automatically mean the title is marketable. Marketable title implies a title free from reasonable doubt, allowing a prudent person to accept it. The presence of an unrecorded easement, even if the title company is willing to insure against loss due to it, still clouds the title and could reasonably deter a buyer. In North Carolina, the standard for marketable title is high, and a buyer is generally entitled to a title free from significant encumbrances that could lead to litigation or impair the property’s value. The title company’s willingness to insure simply means they are willing to assume the risk of a claim arising from the easement; it doesn’t erase the defect itself. Therefore, advising the buyer that the title is marketable solely based on the title company’s willingness to insure would be incorrect and potentially expose the agent to liability. A prudent agent should advise the buyer to seek legal counsel regarding the easement’s impact on marketability.

To determine the premium split, we first calculate the total premium. The base rate is \$4.00 per \$1,000 of coverage for the first \$100,000. The rate then decreases to \$3.00 per \$1,000 for coverage between \$100,001 and \$500,000, and further to \$2.50 per \$1,000 for coverage exceeding \$500,000. For a \$750,000 policy: First \$100,000: \[\frac{\$100,000}{\$1,000} \times \$4.00 = \$400\] Next \$400,000 (from \$100,001 to \$500,000): \[\frac{\$400,000}{\$1,000} \times \$3.00 = \$1,200\] Remaining \$250,000 (from \$500,001 to \$750,000): \[\frac{\$250,000}{\$1,000} \times \$2.50 = \$625\] Total Premium = \$400 + \$1,200 + \$625 = \$2,225 The title insurance company retains 85% of the premium, and the independent contractor receives 15%. Therefore, the independent contractor’s share is: Independent Contractor’s Share = 0.15 * \$2,225 = \$333.75 This calculation reflects the tiered premium structure common in title insurance, where rates decrease as the coverage amount increases. Understanding this structure is crucial for TIPICs in North Carolina to accurately calculate premiums and understand their commission splits. The tiered approach incentivizes larger policies while remaining competitive. The independent contractor’s commission is directly tied to the total premium collected, emphasizing the importance of accurate policy valuation and sales efforts. This scenario tests the ability to apply these rates and calculate the correct commission, which is a key function of a TIPIC.

In North Carolina, the Conner Act (North Carolina General Statute § 47-18) is a recording statute that dictates the validity of certain real estate documents against third parties. Specifically, it states that no conveyance of land, or contract to convey, or option to convey, shall be valid against purchasers for value from the donor, bargainor, or lessor, but from the time of registration thereof in the county where the land lies. This means that an unrecorded deed is still valid between the grantor and grantee, but it is not valid against a subsequent purchaser who buys the property for value and without notice of the prior unrecorded deed, provided they record their deed first. Therefore, even though the deed was executed and delivered, the subsequent purchaser who records first has superior title.

In North Carolina, an attorney’s opinion on title, while valuable, does not provide the same level of protection as a title insurance policy. The attorney’s opinion is based on their examination of the public records and their legal interpretation of those records as of a specific date. This opinion is subject to errors in the examination or interpretation, and the attorney’s liability is typically limited to negligence. Title insurance, on the other hand, provides indemnity against defects in title, regardless of whether they were discoverable in the public record or caused by negligence. This includes protection against hidden risks such as forgery, fraud, and undisclosed heirs. Furthermore, title insurance covers the cost of defending the title against covered claims and will pay for losses up to the policy amount. Therefore, while an attorney’s opinion is a crucial part of the real estate transaction, it does not offer the comprehensive financial protection and risk mitigation that a title insurance policy provides. The key difference lies in the scope of coverage and the financial backing to cover potential losses.

The formula to calculate the premium is: Premium = Base Rate + (Additional Coverage Amount * Rate per $1000). First, we need to calculate the amount of additional coverage needed. The lender requires coverage for 125% of the loan amount, which is \(125\% \times \$350,000 = 1.25 \times \$350,000 = \$437,500\). The standard policy covers the original loan amount of $350,000. Therefore, the additional coverage required is \(\$437,500 – \$350,000 = \$87,500\). Next, we need to calculate the cost of this additional coverage. The rate is given per $1000, so we divide the additional coverage by 1000 and multiply by the rate: \(\frac{\$87,500}{1000} \times \$2.50 = 87.5 \times \$2.50 = \$218.75\). Finally, we add this to the base rate to find the total premium: \(\$750 + \$218.75 = \$968.75\). Therefore, the total premium for the lender’s title insurance policy is $968.75.

In North Carolina, the statutory framework governing title insurance emphasizes consumer protection and fair business practices. A key aspect is the regulation of premium rates to prevent excessive charges and ensure the financial stability of title insurers. If a title insurance producer, acting as an independent contractor, offers a discount or rebate on the premium that isn’t filed with and approved by the North Carolina Department of Insurance, they are violating state regulations. Such actions undermine the standardized rate structure designed to prevent unfair competition and protect consumers from potentially unstable or underfunded title insurance policies. This also creates an uneven playing field, potentially harming other title insurance businesses that adhere to the approved rate structure. The producer’s actions could result in disciplinary actions, including fines, suspension, or revocation of their license, as well as legal repercussions for violating state insurance laws. It’s crucial for TIPICs to adhere strictly to the approved premium rates and avoid any unauthorized discounts or rebates.

In North Carolina, a quiet title action is a legal proceeding to establish clear ownership of real property. When a title insurance company defends a quiet title action on behalf of its insured, the policy coverage comes into play. The extent of coverage depends on the specific policy terms and the nature of the title defect. Standard owner’s policies typically cover defects that existed at the time the policy was issued but are subject to policy exclusions and limitations. The defense costs and any resulting settlement or judgment are generally covered up to the policy amount, provided the defect is not excluded. If the quiet title action reveals a defect that the title company should have discovered during the title search but did not, the company may be liable. However, coverage can be affected if the insured had prior knowledge of the defect and did not disclose it to the title company. The title insurance company will typically manage the legal defense, including hiring attorneys and covering court costs, to protect the insured’s interest in the property. The policy conditions outline the responsibilities of both the insured and the insurer in the event of a claim, including the duty to cooperate and provide documentation.

The calculation involves determining the required title insurance coverage amount for a construction loan, factoring in the original loan amount, anticipated cost overruns, and a percentage-based contingency. First, we calculate the potential cost overrun: $500,000 * 15% = $75,000. This represents the maximum possible increase in construction costs. Next, we determine the contingency reserve: $500,000 * 5% = $25,000. This is the amount specifically set aside to cover unforeseen expenses. The total potential exposure for the title insurance policy is the sum of the original loan, the potential cost overrun, and the contingency reserve: $500,000 + $75,000 + $25,000 = $600,000. This total represents the maximum amount the title insurance policy might need to cover, accounting for both planned and unplanned construction-related expenses. The title insurance coverage must therefore be $600,000 to adequately protect the lender’s interests throughout the construction project, considering potential title defects that could arise due to construction activities, liens, or other encumbrances. The underwriter needs this calculation to determine the appropriate premium and risk assessment for the policy.

The Closing Disclosure is a standard form used in real estate transactions to disclose all costs associated with the mortgage and closing process. It’s mandated by the TILA-RESPA Integrated Disclosure (TRID) rule, which aims to provide consumers with clear and understandable information about the terms of their mortgage and closing costs. The Closing Disclosure includes details such as the loan amount, interest rate, monthly payments, closing costs, taxes, and insurance. It’s typically provided to the borrower at least three business days before closing, allowing them time to review the terms and ask questions. The form is divided into sections that categorize different types of costs and fees, making it easier for borrowers to understand where their money is going. Accurate completion of the Closing Disclosure is crucial to ensure compliance with federal regulations and to protect consumers from hidden fees or surprises at closing.

In North Carolina, the Marketable Record Title Act (MRTA) is crucial in clearing title defects and simplifying land transactions. The MRTA effectively extinguishes old claims and encumbrances that predate a “root of title” which is defined as an unbroken chain of title extending back at least 30 years. However, there are exceptions. One exception is easements, if they are visible or their existence can be demonstrated by physical evidence of their use, such as a clearly visible road or utility lines. Another exception includes rights of any person in possession of the real property. A third exception is any interest arising out of a title transaction which has been duly recorded subsequent to the root of title. Another exception is state or federal tax liens. In the scenario, the easement is visible and in use, so it survives despite predating the root of title. The unrecorded mortgage from 1985 is extinguished because it is not visible, the bank did not take possession, and it was not recorded after the root of title. The 2010 judgment lien is valid because it was recorded after the root of title. Therefore, the title insurance policy will likely exclude the easement and the 2010 judgment lien from coverage, but not the 1985 mortgage.

The calculation involves determining the necessary title insurance coverage for a construction loan, considering the initial loan amount, anticipated disbursements, and a safety margin. The initial loan is $500,000. Anticipated disbursements are 70% of the loan, which equals \(0.70 \times \$500,000 = \$350,000\). The lender requires a 20% safety margin on the anticipated disbursements, calculated as \(0.20 \times \$350,000 = \$70,000\). The total title insurance coverage needed is the initial loan amount plus the safety margin: \(\$500,000 + \$70,000 = \$570,000\). This ensures the lender is adequately covered for potential cost overruns or increased expenses during the construction phase, mitigating risks associated with mechanic’s liens or other title defects that could arise during construction. The safety margin provides a buffer against unforeseen increases in construction costs, protecting the lender’s investment.

The scenario presents a complex situation involving a potential boundary dispute and a previously unknown easement affecting a property in North Carolina. The key is to understand the roles and responsibilities of the various parties involved, particularly the title insurance underwriter, and to assess the insurability of the title given the circumstances. The underwriter must consider the marketability of the title, which is directly impacted by the potential boundary dispute and the unrecorded easement. While a survey might reveal the boundary issue, the underwriter’s responsibility extends to assessing the overall risk. The title insurance policy protects against defects of record and certain off-record risks, but the underwriter must determine the extent of coverage that can be offered, considering the existing issues. A standard policy might not cover the unrecorded easement, and an endorsement or exception might be necessary. The underwriter’s decision will depend on the severity of the potential boundary dispute, the nature and impact of the easement, and the willingness of the parties to resolve the issues. Ultimately, the underwriter must balance the need to provide coverage with the need to mitigate risk and avoid future claims. The most prudent course of action is to require resolution of the boundary dispute and specifically except the unrecorded easement from coverage, ensuring transparency and minimizing potential liability.

In North Carolina, the Marketable Title Act (MTA) is crucial for clearing title defects and simplifying land transactions. It essentially extinguishes old claims and encumbrances that predate a “root of title,” which is defined as an unbroken chain of title extending back at least 30 years. However, there are exceptions. Interests arising from matters inherent in the root of title itself (e.g., a deed restriction clearly mentioned in the root deed) are not extinguished. Similarly, rights of parties in possession are generally protected, as are easements evidenced by visible physical facilities. Mineral rights are also usually preserved, unless specifically addressed in the root of title. The key is understanding that the MTA doesn’t automatically wipe away everything older than 30 years; it’s a nuanced process with specific exceptions designed to balance the need for clear titles with the protection of legitimate property rights. A title examiner must carefully review the chain of title, noting any exceptions to the MTA that could affect the insurability of the title. In this scenario, the easement’s visibility due to the power lines makes it an exception to the Marketable Title Act.

The formula for calculating the net proceeds after commissions and other fees is: Net Proceeds = Sale Price – (Commission Rate × Sale Price) – Fixed Costs. In this scenario, the sale price is $450,000, the commission rate is 6% (or 0.06), and the fixed costs are $2,500. First, calculate the commission amount: Commission = 0.06 × $450,000 = $27,000. Next, calculate the total deductions: Total Deductions = Commission + Fixed Costs = $27,000 + $2,500 = $29,500. Finally, subtract the total deductions from the sale price to find the net proceeds: Net Proceeds = $450,000 – $29,500 = $420,500. Therefore, the seller, Ms. Anya Sharma, will receive $420,500 after all commissions and fees are paid. This calculation is crucial in real estate transactions to ensure transparency and accuracy in financial settlements. Understanding how these proceeds are derived is essential for a title insurance producer to effectively communicate with clients and stakeholders, particularly in North Carolina, where specific regulations and consumer protection laws apply to real estate transactions. Knowing the correct net proceeds allows the producer to ensure that all parties involved understand the financial implications of the transaction and that all necessary disclosures are accurately provided.

In North Carolina, the duty to defend refers to the title insurer’s obligation to protect the insured’s title against covered claims. This duty arises when a claim is made against the insured’s title that is covered by the terms of the title insurance policy. The insurer must provide legal representation and bear the costs of defending the insured’s title in court. The duty to defend is generally broader than the duty to indemnify (pay for losses). The insurer must defend even if the claim ultimately proves to be without merit, as long as there is a reasonable possibility that the claim could be covered by the policy. The duty to defend continues until the claim is resolved, either through settlement, dismissal, or a final court judgment. In this scenario, a lawsuit has been filed against the property, alleging a boundary dispute. This lawsuit directly challenges the insured’s title. Because the title insurance policy covers such claims, the title insurance company has a duty to defend the insured against the lawsuit.

In North Carolina, the Marketable Title Act (MTA) aims to simplify title searches by extinguishing old claims and encumbrances that cloud title. A key provision of the MTA is that a person with an unbroken chain of title for 30 years or more, supported by a record title, is deemed to have a marketable title, free from claims that predate the 30-year period. However, there are exceptions. Interests arising from matters inherent in the title documents used to establish the 30-year chain of title are not extinguished. Similarly, recorded or unrecorded rights of parties in possession are protected. Easements are generally protected if they are visible or apparent. Federal government interests are also typically exempt from the MTA’s extinguishment provisions. In this scenario, while the 30-year chain exists, the unrecorded easement, if visible and in use, would likely survive the application of the MTA. The fact that the neighbor has been visibly using the path for 35 years is critical. The key is whether the easement is apparent, and the long-standing use makes it so. If the easement is not apparent or visible, it could be extinguished by the MTA.

To calculate the total premium for the simultaneous issue of an owner’s and lender’s title insurance policy, we must consider the base rate for the owner’s policy and the discounted rate for the lender’s policy. The North Carolina rate manual dictates that the lender’s policy, when issued simultaneously with the owner’s policy, is subject to a reduced rate. In this scenario, the owner’s policy is based on the full purchase price, and the lender’s policy is calculated at a percentage of the loan amount. The standard discount for a simultaneous issue lender’s policy in North Carolina is typically 20% off the basic rate for the lender’s coverage amount. First, calculate the premium for the owner’s policy: Owner’s Policy Premium = Purchase Price / $1,000 * Base Rate per $1,000 Owner’s Policy Premium = $450,000 / $1,000 * $3.00 = $1,350 Next, calculate the premium for the lender’s policy before the discount: Lender’s Policy Premium (Before Discount) = Loan Amount / $1,000 * Base Rate per $1,000 Lender’s Policy Premium (Before Discount) = $360,000 / $1,000 * $3.00 = $1,080 Now, apply the 20% discount to the lender’s policy premium: Discount Amount = Lender’s Policy Premium (Before Discount) * Discount Rate Discount Amount = $1,080 * 0.20 = $216 Calculate the discounted lender’s policy premium: Discounted Lender’s Policy Premium = Lender’s Policy Premium (Before Discount) – Discount Amount Discounted Lender’s Policy Premium = $1,080 – $216 = $864 Finally, calculate the total premium for both policies: Total Premium = Owner’s Policy Premium + Discounted Lender’s Policy Premium Total Premium = $1,350 + $864 = $2,214 Therefore, the total premium for the simultaneous issue of the owner’s and lender’s title insurance policies is $2,214.

The Real Estate Settlement Procedures Act (RESPA) aims to protect consumers from abusive lending practices, ensure transparency in real estate transactions, and eliminate kickbacks or unearned fees. One key aspect of RESPA is Section 8, which prohibits kickbacks, referral fees, and unearned fees. In the given scenario, Anya, a North Carolina TIPIC, provides marketing materials and pays for a catered lunch for a real estate agent’s open house in exchange for referrals. This action directly violates RESPA’s Section 8, as it constitutes giving something of value (marketing materials and lunch) in exchange for the referral of settlement service business (title insurance). While providing educational materials or generic marketing without a direct link to referrals might be permissible, directly paying for events to secure referrals is a clear violation. The penalties for violating RESPA can include fines up to \$10,000 and imprisonment for up to one year. Therefore, Anya’s actions are a violation of RESPA due to the direct exchange of value for referrals.

The question focuses on the intersection of environmental regulations and title insurance, a crucial area for North Carolina TIPICs. In North Carolina, contaminated properties, often referred to as brownfields, present unique challenges. The state’s Brownfields Program aims to encourage redevelopment of these sites, but potential title issues arise from environmental liens and the potential for future remediation costs. Title insurance policies typically exclude coverage for environmental contamination known to the insured or resulting from their actions. However, specialized endorsements or policies can provide limited coverage for specific environmental risks. Due diligence, including Phase I and Phase II Environmental Site Assessments (ESAs), is crucial. If an ESA reveals contamination, the underwriter must carefully assess the risk, considering factors such as the type and extent of contamination, the cost of remediation, and the likelihood of future claims. The presence of an environmental lien, which gives the state priority for recovering cleanup costs, significantly impacts the marketability and insurability of the title. A title insurance policy might include an exception for the existing environmental lien, or, depending on the circumstances and the underwriter’s assessment, a specialized endorsement could provide some coverage against loss due to the lien. The key is understanding the specific contamination, the applicable North Carolina environmental regulations, and the underwriter’s risk tolerance.

To calculate the total title insurance premium, we need to consider the base rate for the first \$100,000 of coverage and the incremental rates for each additional \$1,000 increment above that. The base rate for the first \$100,000 is \$500. The property value exceeding \$100,000 is \$350,000 – \$100,000 = \$250,000. The rate for each additional \$1,000 increment is \$2.50. Therefore, the additional premium for the \$250,000 is calculated as follows: \[ \text{Additional Premium} = \frac{\$250,000}{\$1,000} \times \$2.50 = 250 \times \$2.50 = \$625 \] The total premium is the sum of the base premium and the additional premium: \[ \text{Total Premium} = \$500 + \$625 = \$1125 \] This calculation accurately reflects how title insurance premiums are determined in North Carolina, where a base rate is applied to the initial coverage amount, and incremental rates are used for coverage exceeding that amount. This method ensures that premiums are proportional to the property value and the associated risk.

In North Carolina, the Real Estate Settlement Procedures Act (RESPA) aims to protect consumers from abusive lending practices and ensure transparency in real estate transactions. A crucial aspect of RESPA is the prohibition of kickbacks and unearned fees. Title insurance producers, including independent contractors (TIPICs), must be particularly vigilant in avoiding any arrangements that could be construed as violating RESPA. For instance, a TIPIC cannot offer or accept anything of value in exchange for referrals of settlement service business. This includes direct payments, discounts, or even subtle forms of compensation. The focus is on ensuring that consumers are not steered towards particular service providers based on hidden financial incentives rather than the quality and cost of services. Furthermore, any marketing or advertising activities undertaken by a TIPIC must be independently funded and not subsidized by other parties involved in the transaction, such as real estate agents or lenders, to maintain impartiality and prevent undue influence. The goal is to maintain a fair and competitive marketplace where consumers can make informed decisions about their title insurance needs.

In North Carolina, the Marketable Title Act (MTA) aims to simplify title searches by extinguishing certain old claims and encumbrances that affect title to real property. Specifically, if a person has an unbroken chain of title to real estate for 30 years or more, and no one else has filed a notice of claim during that period, the MTA can extinguish prior interests. This means that title examiners often only need to search back 30 years to establish marketable title, unless there’s a specific exception or a filed notice preserving older claims. The scenario presented involves a 35-year unbroken chain of title. While the MTA provides a basis for marketable title, certain interests are specifically exempted. These exceptions often include rights of the United States, railroad rights-of-way, and recorded easements. Therefore, even with a 35-year chain, a title examiner must still investigate for these exempted interests to ensure that the title is indeed marketable and insurable. The presence of a recorded easement, regardless of the 35-year chain, necessitates its inclusion as an exception in the title insurance policy.

To determine the premium split between the title insurance company and the independent contractor, we first need to calculate the total premium due for the title insurance policy. Given the property value of $450,000 and a rate of $3.00 per $1,000, the total premium is calculated as follows: Total Premium = (Property Value / $1,000) * Rate per $1,000 Total Premium = \(\frac{450,000}{1,000} \times 3.00 = 450 \times 3.00 = $1,350\) Next, we calculate the title insurance company’s share of the premium, which is 85% of the total premium: Company Share = Total Premium * Company Percentage Company Share = \(1,350 \times 0.85 = $1,147.50\) Finally, we calculate the independent contractor’s share, which is the remaining 15% of the total premium: Contractor Share = Total Premium * Contractor Percentage Contractor Share = \(1,350 \times 0.15 = $202.50\) Therefore, the independent contractor’s share of the premium is $202.50. Understanding the premium split is vital for TIPICs in North Carolina as it directly affects their compensation and financial planning. This calculation ensures compliance with state regulations regarding premium distribution and helps the TIPIC accurately forecast their income based on policy sales. The correct distribution also ensures the financial stability of both the independent contractor and the title insurance company, fostering a sustainable business relationship.

In North Carolina, understanding the interplay between foreclosure proceedings and title insurance is critical. When a property is subject to foreclosure, the title insurance policy in place typically protects the lender’s interest up to the policy limits. However, a subsequent purchaser at a foreclosure sale might encounter title defects that pre-date the foreclosure action but were not extinguished by it. For example, if there was an unrecorded easement or a prior lien holder who was not properly notified of the foreclosure, these issues could cloud the title even after the foreclosure sale. A title insurance policy issued to the new purchaser would generally cover these pre-existing defects, provided they were not specifically excluded in the policy. The key here is whether the defect was extinguished by the foreclosure process. If a necessary party (like a junior lienholder) was not properly included in the foreclosure action, their interest might survive, creating a title issue for the new owner. The underwriter’s role is to assess the risk associated with these potential defects and determine the insurability of the title for the new purchaser. The policy would cover losses or damages sustained by the insured purchaser as a result of these covered defects, up to the policy amount, and would also cover the costs of defending the title against such claims. This protection ensures the purchaser’s investment is secure and provides recourse if unforeseen title problems arise due to issues not properly resolved during the foreclosure.

The correct answer involves understanding the nuanced application of the Real Estate Settlement Procedures Act (RESPA) in North Carolina, specifically concerning affiliated business arrangements (AfBAs) and fee splitting. RESPA permits AfBAs under certain conditions, including full disclosure to the consumer, freedom of choice for the consumer to select services, and a return on the ownership interest or franchise relationship. However, RESPA strictly prohibits the payment of referral fees or any split of charges where a service has not actually been performed. In the given scenario, while the title agency and the real estate brokerage have an AfBA, the proposed arrangement where the brokerage receives a portion of the title insurance premium without providing any actual, necessary services related to the title insurance work violates RESPA’s anti-kickback provisions. The key is whether the brokerage is performing services that justify the fee split, not simply because they referred the business. The mere referral does not constitute a service under RESPA. Therefore, the proposed arrangement would be a violation of RESPA.

To calculate the total premium, we need to determine the base rate premium and then add the additional coverage premium. The base rate premium is calculated by multiplying the first \$100,000 of the property value by \$4.00 per \$1,000 and the remaining value by \$2.50 per \$1,000. Base Premium Calculation: First \$100,000: \[\frac{\$100,000}{\$1,000} \times \$4.00 = \$400\] Remaining value: \$350,000 – \$100,000 = \$250,000 Remaining \$250,000: \[\frac{\$250,000}{\$1,000} \times \$2.50 = \$625\] Base Premium Total: \$400 + \$625 = \$1,025 Additional Coverage Premium: Additional coverage is 20% of the property value: 0.20 * \$350,000 = \$70,000 Premium for additional coverage: \[\frac{\$70,000}{\$1,000} \times \$3.00 = \$210\] Total Premium: Total Premium = Base Premium + Additional Coverage Premium Total Premium = \$1,025 + \$210 = \$1,235 Therefore, the total premium for the title insurance policy is \$1,235. The calculation accurately accounts for both the base premium based on tiered property value and the additional coverage premium.