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45. Is the title insurance company obligated to pay the friend's claim?
Subsequently, the county began proceedings to foreclose the tax lien, and the friend filed a claim with the woman's title insurance company, demanding that the company reimburse her for the tax lien amount.
Last year, the woman conveyed the lot for a bargain price by a quitclaim deed to a friend, who paid cash, did not conduct a title search, and did not purchase title insurance.
Two years ago, a developer conveyed title to a lot to a woman by warranty deed. The woman purchased an owner's policy of title insurance before the closing. Because of an error by the title insurance company, the title commitment and title policy failed to list a county tax lien encumbering the lot as an exception to coverage.
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A is correct. An owner's policy only protects the owner of the policy and does not run with the land for subsequent conveyances. Here, the woman purchased an owner's policy, which would not cover the friend to which she conveyed the land.
B is incorrect. The reason the friend is not covered is not that the policy expired; the friend is not covered because owner's policies do not cover subsequent conveyances.
C is incorrect. Owner's policies do not cover subsequent conveyances, only lender's policies.
D is incorrect. Owner's policies do not cover subsequent conveyances. A quit claim deed does not contain a covenant against encumbrances and merely transfers woman's interest in the property, which was fee title subject to a tax lien.