A St. Petersburg couple refinances their home and obtains a new lender's title insurance policy. Three months later, they discover an unrecorded federal tax lien that predates their original purchase 5 years ago. Which policy would potentially cover this issue?
Correct Answer
D) Both the owner's policy and the new lender's policy
Correct: D - Both the owner's policy and the new lender's policy. Both policies would potentially provide coverage - the owner's policy protects the owner's interest, and the lender's policy protects the new lender's interest against this pre-existing defect. Why not A: This option is incorrect because "Only their original owner's policy from 5 years ago" does not match the rule tested by the question. The correct answer is "Both the owner's policy and the new lender's policy". Both policies would potentially provide coverage - the owner's policy protects the owner's interest, and the lender's policy protects the new lender's interest against this pre-existing defect. Why not B: This option is incorrect because "Neither policy since the lien was unrecorded" does not match the rule tested by the question. The correct answer is "Both the owner's policy and the new lender's policy". Both policies would potentially provide coverage - the owner's policy protects the owner's interest, and the lender's policy protects the new lender's interest against this pre-existing defect. Why not C: This option is incorrect because "Only the new lender's policy from the refinance" does not match the rule tested by the question. The correct answer is "Both the owner's policy and the new lender's policy". Both policies would potentially provide coverage - the owner's policy protects the owner's interest, and the lender's policy protects the new lender's interest against this pre-existing defect.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bargain and sale deed implies that the grantor holds title and possession of the property but does not include warranties against encumbrances or title defects.
The chain of title is the sequential history of all transfers of ownership for a specific property, from the original source (typically a government patent or grant) to the present owner. An unbroken chain is essential for marketable title.
The closing process, also called settlement, is the final step in a real estate transaction where documents are signed, funds are disbursed, and title is officially transferred from the seller to the buyer.
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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A Pensacola buyer's title insurance commitment shows 'Exception 5: Easement for utilities as shown on recorded plat.' The buyer wants this exception removed. What must typically happen for the title company to remove this exception?
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All of the following situations would typically result in a title insurance claim being paid in Florida EXCEPT: