What is an example of a lien that may not be covered by standard title insurance?

Study for the California Real Estate Broker Exam. Utilize flashcards and multiple choice questions, each with hints and explanations. Prepare efficiently and effectively for your licensing exam!

An example of a lien that may not be covered by standard title insurance is an unrecorded mechanic's lien. Title insurance is designed to protect property owners and lenders from claims against the title of a property that were not disclosed during the title search conducted before the purchase of a property.

Standard title insurance typically protects against liens that have been properly recorded in public records. Mechanic's liens, which can be filed by contractors or subcontractors for unpaid work, must be recorded to be enforceable against the property. However, if the lien has not yet been recorded, it will not be discovered during a standard title search, leaving the property owner vulnerable to its enforcement.

Since unrecorded mechanic's liens do not appear in public records, standard title insurance generally does not provide coverage against these types of claims, which may result in unexpected financial liability for the property owner. Other lien types, such as mortgage liens, property tax liens, and judgment liens, are usually recorded and therefore covered by title insurance policies.

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