A property in Carver County, Minnesota is being sold in a transaction where the buyer, Omar, discovers after closing that the grantor's ex-spouse had an undisclosed interest in the property due to an unrecorded divorce decree that awarded the ex-spouse a partial ownership interest. Omar purchased an owner's title insurance policy at closing. The grantor used a general warranty deed. Which of the following most accurately describes Omar's legal position?

Correct Answer

B) Omar may pursue a claim under the owner's title insurance policy and may also have a breach of warranty claim against the grantor

Omar has two potential avenues of recovery. First, owner's title insurance policies in Minnesota typically cover losses from title defects including unrecorded interests and claims by third parties — this is precisely the type of risk title insurance is designed to address. Second, because the grantor used a general warranty deed, the grantor warranted title against all defects including those arising before their ownership. The undisclosed ex-spouse's interest constitutes a breach of the warranty covenants, giving Omar a breach of warranty claim against the grantor. Both remedies may be available simultaneously, and the title insurer may pursue subrogation against the grantor after paying the claim.