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 Paul'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?