A buyer in Miami is purchasing a $450,000 home with a $360,000 mortgage. The lender requires a loan policy, and the buyer wants an owner's policy. According to Florida regulations, what is the standard practice regarding title insurance policies?

Correct Answer

A) Two separate policies are needed - an owner's policy for $450,000 and a loan policy for $360,000

Correct: A - Two separate policies are needed - an owner's policy for $450,000 and a loan policy for $360,000. Two separate policies are required - an owner's policy for the full purchase price ($450,000) and a loan policy for the mortgage amount ($360,000). Why not B: This option is incorrect because "The lender's policy automatically protects the buyer's interests" does not match the rule tested by the question. The correct answer is "Two separate policies are needed - an owner's policy for $450,000 and a loan policy for $360,000". Two separate policies are required - an owner's policy for the full purchase price ($450,000) and a loan policy for the mortgage amount ($360,000). Why not C: This option is incorrect because "Only one policy covering both owner and lender is required" does not match the rule tested by the question. The correct answer is "Two separate policies are needed - an owner's policy for $450,000 and a loan policy for $360,000". Two separate policies are required - an owner's policy for the full purchase price ($450,000) and a loan policy for the mortgage amount ($360,000). Why not D: This option is incorrect because "Title insurance is optional in Florida residential transactions" does not match the rule tested by the question. The correct answer is "Two separate policies are needed - an owner's policy for $450,000 and a loan policy for $360,000". Two separate policies are required - an owner's policy for the full purchase price ($450,000) and a loan policy for the mortgage amount ($360,000).