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).
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Related Topics & Key Terms
Key Terms:
Related Concepts
For a deed to be valid, it must contain several essential elements including a competent grantor, identifiable grantee, consideration, legal description, granting clause, signature of the grantor, and delivery and acceptance.
Escrow is an arrangement in which a neutral third party holds documents, funds, or other items on behalf of the buyer and seller until all conditions of the transaction are met.
A general warranty deed provides the greatest protection to the grantee by guaranteeing that the grantor holds clear title and has the right to sell the property. It includes covenants that protect against all defects in title, even those arising before the grantor owned the property.
More Titles Deeds Recording Questions
A Tampa property is being purchased for $450,000. The buyer wants to know the cost of owner's title insurance. Using Florida's promulgated rate of $5.75 per $1,000 of coverage, what is the title insurance premium?
In a Tampa transaction, a buyer wants the Florida rule on general warranty. Which statement is correct?
Which answer most accurately states the Florida rule for general warranty?
Sarah is selling her Miami Beach condominium to Robert. At closing, she signs a deed that contains warranties that she owns the property and has the right to convey it, but provides no warranties against defects that existed before she acquired the property. What type of deed did Sarah most likely execute?
John and Mary own property in Jacksonville as tenants by the entirety. John wants to secretly transfer his interest to his business partner without Mary's knowledge or consent. He executes a quitclaim deed to his partner. What is the effect of this deed?
- → What is the main difference between a general warranty deed and a special warranty deed in Florida?
- → Under Florida law, what does 'constructive notice' mean in the context of recorded deeds?
- → Which answer most accurately states the Florida rule for chain of title?
- → In Florida, all of the following situations would typically be excluded from standard title insurance coverage EXCEPT:
- → Non-single-family real property in Miami-Dade County is conveyed for $220,000. What total deed documentary stamp tax and surtax are due?
- → Sarah is purchasing a home in Miami and her attorney discovers that the current owner's deed was never properly recorded. The seller has been living in the property for 15 years and paying taxes. What is the most likely outcome regarding the validity of the seller's ownership?
- → Which deed is most commonly used in Florida residential transactions?
- → Sarah discovers that her neighbor's fence encroaches 3 feet onto her property, which she purchased 2 years ago in Jacksonville. Her title insurance policy shows no survey exception. What is the most likely outcome regarding her title insurance claim?
- → A Florida owner uses a quitclaim deed to transfer whatever interest the owner has to a family member. Which statement about that instrument is incorrect?
- → Lisa conveys property to Tom via warranty deed on Monday but doesn't record it. On Wednesday, Lisa conveys the same property to Susan via warranty deed, and Susan immediately records her deed. Susan had no knowledge of the prior conveyance to Tom. Under Florida's recording statute, who has superior title?
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Previous Question
Training example Granite Outline asks the question this way. In a Tallahassee transaction, a closing coordinator wants the Florida rule on owner's versus lender's coverage. Which statement is correct?
Next Question
All of the following are typically covered by a standard Florida owner's title insurance policy EXCEPT: