Escrow & Title
A Kentucky buyer purchases a home and later discovers the seller had a second mortgage that was not disclosed. The buyer's title insurance policy will:
AProvide no coverage because the buyer should have investigated
BCover losses arising from the undisclosed mortgage lien✓ Correct
CRequire the buyer to sue the seller personally
DOnly cover up to the amount of the down payment
Explanation
Owner's title insurance protects the buyer against losses from title defects, including undisclosed liens and encumbrances that existed at the time of closing. This is a core purpose of the title insurance policy.
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