Title insurance is an essential safeguard that protects against financial loss due to issues with property ownership. Whether you’re buying a home or refinancing a mortgage, understanding the difference between an owner’s policy and a lender’s policy is key to ensuring your investment is secure. While both policies offer protection, they are different.
An owner’s title insurance policy is designed to protect the homeowner. It offers financial protection if any title issues arise that existed before the homeowner purchased the property. This coverage typically includes problems like unpaid property taxes, liens, or ownership disputes that may threaten your legal right to the property. This policy covers the full value of the property, ensuring the homeowner’s investment is protected. The protection lasts as long as the homeowner or their heirs maintain an interest in the property. Although not legally required, obtaining an owner’s policy is highly advisable to safeguard your financial interest in the property.
A lender’s title insurance policy, on the other hand, protects the mortgage lender. This coverage is typically required by lenders as a condition for granting a mortgage loan. The lender’s policy ensures that their financial interest in the property is secure if a title issue arises. This policy covers the amount of the mortgage loan rather than the full property value. Most lenders require this protection to minimize risk. It’s important to note that this policy does not protect the homeowner’s financial investment in the property.
While a lender’s policy is often mandatory, an owner’s policy is an optional but valuable investment. Without an owner’s policy, homeowners risk financial loss from unforeseen title issues that may arise long after closing. By securing both types of title insurance, you can ensure comprehensive protection for both yourself and your lender, giving you peace of mind in your property investment.
Laura Harbison, ABR, AHWD, BPOR, BS, CDPE, CRS, DRB, GRI, PSA, RSPS, SRES
Broker/Owner REALTY EXECUTIVES SOUTHERN NEVADA PROPERTIES
License NumbersB.0026537LLCPM.0164922.BKR
