Scenario:

Sam and Martha, a newlywed couple, recently bought their first home from Peter.   After a few months after the sale, they were sued by Peter’s cousin, Paul, who claimed he owned 1/2 of the rights to the house with Peter and did not authorize the sale.  Peter had told Sam & Martha about Peter’s interest in the property prior to the purchase of the home, but assured them that he had authority to sell.

Questions to Answer:

1.  Would title insurance cover Sam & Martha against Paul’s claim?  Discuss in detail. 

2.  Are there any exclusions that might apply?