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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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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