During escrow for a property in Sacramento, the title company discovers a recorded abstract of judgment against the seller for $45,000. The buyer is concerned about proceeding with the purchase. What must happen before the title company will issue a clean title insurance policy?
Correct Answer
D) The judgment lien must be satisfied or released from the property before or at closing
In California, a recorded abstract of judgment creates a lien on the debtor's real property. For the title company to issue a clean title insurance policy without this lien as an exception, the judgment must be satisfied (paid off) and a release or satisfaction of judgment must be recorded. This is typically handled during escrow from the seller's proceeds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A special warranty deed guarantees that the grantor has not caused any title defects during their period of ownership, but does not warrant against defects that existed before the grantor acquired the property.
Title insurance is a policy that protects the insured party against financial loss from defects in title that were not discovered during the title search. Unlike other insurance, it covers past events rather than future risks.
A title search is an examination of public records to determine the history of ownership, liens, encumbrances, and other interests affecting a property. It verifies that the seller has the legal right to transfer the property.
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Previous Question
A buyer purchases a home in Orange County, California, and receives a CLTA standard title insurance policy. Three years later, the buyer discovers that a deed in the chain of title was forged 20 years ago, potentially voiding the buyer's ownership. The buyer files a claim with the title insurance company. How will the title insurance company MOST likely respond?
Next Question
In a California transaction, the buyer receives a grant deed that is properly executed and delivered but NOT recorded. One month later, the grantor files for bankruptcy. The bankruptcy trustee claims the property is part of the bankruptcy estate. Under California law, what is the MOST likely outcome?