Why are there separate title policies for owners and lenders?

By
Title Insurance ePro, MBA

First American Title Insurance San Diego CAThere are two types of title insurance: owner's title insurance, called an Owner's Policy, and lender's title insurance, called a Loan Policy. Most lenders require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It only protects the lender's interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases as you pay down your loan and eventually disappears as the loan is paid off.

An Owner's Policy is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you have an interest in the property. Only an Owner's Policy protects the buyer should a covered title problem arise. Possible hidden title problems can include:

  • Errors or omissions in deeds
  • Mistakes in examining records
  • Forgery
  • Undisclosed heirs

An Owner's Policy provides assurance that your title insurance company will stand behind you-monetarily and with legal defense if needed-if a covered title problem arises after you buy your home.

Posted by

Make it a profitable day!

Scott Hoen

SHoen@FirstAM.com

Direct:  (714) 250-5014

Cell:  (714) 270-9607

"The Views expressed herein reflect only the individual's personal views and are not the views of the author's employer."

Comments (4)

Kathy Torline
ERA Herman Group Real Estate - Colorado Springs, CO
Colorado Springs Real Estate Blog 719-287-1049

Good explanation of the different types of Title Insurance.  Thanks for sharing.

Aug 22, 2010 04:06 AM
Sussie Sutton
David Tracy Real Estate - Houston, TX
David Tracy Real Estate for Buyers & Sellers

This post save my behind. I didn't have to explain to my client I just showed her your post! Thanks for doing a great job!

Mar 29, 2011 09:33 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Scott great information. I have as you know written a few posts about Title Insurance.Titile insurance is one of the most important ingredient to a successful Closing of Escrow.

Jul 03, 2011 01:24 PM
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Always buy title insurance. There are numerous problems that can pop up, and title insurance covers many of them.

 

Jun 07, 2018 06:58 AM