A buyer purchases a property in Texas and the closing is completed. Three months later, the buyer discovers that a previous owner had granted a mineral rights lease to an oil company, and drilling equipment is being set up on the property. The buyer's title insurance policy does NOT include mineral rights coverage. What is the buyer's recourse?
Correct Answer
B) The buyer may have a claim against the seller for failure to disclose the mineral rights lease if known, but the title policy without mineral coverage may not cover the loss
If the seller knew about the mineral rights lease and failed to disclose it, the buyer may have a fraud or nondisclosure claim against the seller. However, if the title policy does not include mineral rights coverage, the title company may not cover the loss.
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Related Topics & Key Terms
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Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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