A buyer is purchasing a condominium unit in Calgary. The buyer's bank requires title insurance as part of the mortgage approval process. What is the primary purpose of title insurance in this residential transaction?

Question: A buyer is purchasing a condominium unit in Calgary. The buyer's bank requires title insurance as part of the mortgage approval process. What is the primary purpose of title insurance in this residential transaction?

Answer options:

• To insure the physical structure of the condominium unit against damage. ✅ To protect the buyer and lender against losses arising from defects in the property's title.
• To provide liability coverage for the buyer in case someone is injured on the property.
• To cover the cost of a new Real Property Report if the existing one is outdated.

Correct answer: To protect the buyer and lender against losses arising from defects in the property's title.

Explanation: Title insurance protects against various title defects, such as errors in public records, forged documents, undisclosed liens, and boundary disputes, safeguarding both the owner's and lender's interests, as frequently seen in financing requirements.