Escrow & Title
A buyer discovers after closing that the seller had an undisclosed lien on the property. The buyer is protected against financial loss from this lien by:
AThe purchase and sale agreement's warranty clause
BThe owner's title insurance policy✓ Correct
CThe lender's title insurance policy
DThe seller's homeowners insurance
Explanation
An owner's title insurance policy protects the buyer against financial loss from title defects (including undisclosed liens, encumbrances, and other defects in title) that arose before the policy date. This is precisely the type of defect title insurance is designed to cover.
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