Minnesota State Real Estate Practice Test

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Prepare for the Minnesota State Real Estate Test with questions designed for better comprehension. Use flashcards, access multiple choice questions with detailed explanations, and boost your chances of passing successfully.

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Even with title insurance, what loss may a policyholder still face?

Negotiation fees
Land use changes due to zoning ordinances
Inspection costs
Tenant disputes

The correct answer is: Land use changes due to zoning ordinances

The correct answer highlights that even with the protection of title insurance, a policyholder may still encounter losses related to land use changes due to zoning ordinances. This is because title insurance primarily covers issues related to defects in title records, fraud, and undisclosed liens that may affect ownership. However, it does not protect against governmental actions such as zoning changes that could alter the allowed use of the property. For instance, if a zoning ordinance is adopted that restricts the use of a property or lowers its value, the title insurance policy would not compensate the policyholder, as this falls under the realm of regulatory changes rather than title defects. It is essential to understand that while title insurance offers significant protection against specific risks associated with the title of the property, external factors like zoning laws are not included in that coverage. This understanding helps property owners recognize the limitations of title insurance and the importance of being aware of local zoning regulations and potential changes that could impact their investment.