Kevin purchases a property in Oakland and obtains a CLTA standard title insurance policy. Two years after closing, he discovers that a contractor who performed work on the property before Kevin's purchase recorded a mechanic's lien against the property, but the lien was not indexed in a way that appeared in the title search conducted at closing. Kevin files a claim with his title insurance company. How is this claim most likely to be treated under a CLTA standard policy?

Correct Answer

B) Not covered, because a CLTA standard policy generally excludes off-record matters and liens not disclosed by the public record at the time of the search

A CLTA standard title insurance policy primarily covers defects that are ascertainable from the public record, such as recorded liens, incorrect legal descriptions, and forgery in the chain of title. Risks that fall outside the public record — including unrecorded or undiscoverable liens, rights of parties in possession, and survey encroachments — are generally excluded from CLTA standard coverage. A lien that was not discoverable through a reasonable title search falls into this off-record category. An ALTA extended policy, which requires a physical inspection and covers a broader range of off-record risks, would be better suited to address such claims.