If I've been offered "something" for "nothing" over the years, I have a tendency to question what that "something" really is. When buying a foreclosure property which is also called REO (Real Estate Owned), many times the REO bank will offer to pay for the buyers title insurance policy (called Owner's policy) if the buyer chooses that title company to handle the escrow. Sounds like a good deal, right? Take another look. What many of them will offer the buyer is a Basic Owners Policy which provides very little coverage for the buyer. OK, it's something, but most buyers will agree to pay the difference between the two policies and buy the Enhanced one which is usually 20%-30% higher. This way, they have optimal coverage for the entire time they own the property.
If you're buying a foreclosure property and the foreclosure bank is offering to pay for your Owner's title policy, ask them which one they're providing. Upgrading to the Enhanced policy could prevent lots of heartache should there be a title issue in the future. More than likely there won't be a problem, but you don't want to be the property owner on the receiving end of a lawsuit without the best coverage possible!