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An exception to title insurance coverage is ___________?

  1. Forged documents.

  2. Defects found in public newspapers.

  3. Incorrect records of marital status.

  4. Defects that clearly appear in the title search.

The correct answer is: Defects that clearly appear in the title search.

Title insurance is designed to protect property owners and lenders from financial losses due to defects in a property's title that were not discovered during the title search process before closing. An exception to this coverage means that certain issues are not protected by the insurance policy, and those issues can be detrimental to the owner's or lender's interest. Defects that clearly appear in the title search are an exception because these issues are identifiable during the due diligence process. If a defect is evident in the title records, the title insurer does not cover it, as it was something the purchaser or lender was made aware of before acquiring the property. The goal of title insurance is to cover unforeseen problems that were not detectable through a reasonable investigation prior to closing, hence defects that are apparent from the title search are not insurable risks. The other options pertain to scenarios that either involve potential hidden risks or issues that are not typical for title insurance exceptions, making them different in nature compared to the clear, identifiable defects listed in the correct answer.