For this assignment, please review a sample ALTA homeowner’s policy of title insurance located at this website:
ALTA Homeowner’s Policy
After reviewing the sample policy, please answer the following questions in the text box below:
During a real estate closing for a residential purchase of a brand new single family home, you took out a mortgage in order to purchase the home and were required by your lender to obtain a Lender’s Policy of Title Insurance. A copy of the policy is located at the above link. After purchasing the home you found out that there are some mechanic’s liens on the property relating to a fence that a sub-contractor installed but was never paid for by the original builder/contractor. This was not found during the title history report prepared by the closing company. Will your title insurance defend against this claim and help you quiet your title, should you need legal assistance in removing this encumbrance? Explain in detail why or why not, and don’t forget to note the section on the Title Policy that supports your answer.
Before you purchased the property at the open house, a man was standing in the public road telling everyone that he owned half of the property. He smelled of liquor and was clearly intoxicated. Both you and other potential buyers ignored the man as you walked by, as you had just met the purported owner of the house, a woman, inside. At the time of closing, no mention of this mystery man ever arose on any documentation from the title company, so you were relieved and simply believed him to simply be of unsound mind and never mentioned it to anyone. A few months after living in the home you were served with a Complaint. That intoxicated man you had met months earlier was now suing you for his right to half of the house. He claims that he had inherited half of the house with his sister, but she had not properly recorded the deed. Will your title insurance policy defend against this claim on your behalf? Why or why not? Please be sure to note any sections of the policy upon which you rely. Don’t forget to address any covered claims, as well as exclusions that may or may not apply depending on your legal argument!