What is Lender/Mortgage Title Insurance and Owner Title Insurance? Do I need it?
The quick answer is title insurance is a form of insurance meant to protect the holder from any financial loss incurred from defects in a title to a property. If you are purchasing a property, then yes you need it. This type of insurance protects both real estate owners and lenders against loss or damage brought by liens, encumbrances, or defects in the title or actual ownership of a property. There are two types of title insurance: lenders insurance and owners insurance. Although lender’s title insurance is required, and owner’s title insurance is optional, you really do need both to fully protect your interest. Please note, that his is different than homeowner’s insurance which provides you with financial protection in the event of a disaster or accident involving your home- also required in most closings.
More specifically I have outlined their distinction below:
Owner’s title insurance
- is paid for by the buyer to protect the buyer’s equity in the property;
- protects against title being bestowed in someone other than the Insured party. For instance, against any defect in or lien or encumbrance on the title;
- offers protection if title is defective;
- ensures that the owner has legal access to the property;
- owner retains marketable title to the property;
- ensures that the owner has title free of defects;
- it protects both real estate owners and lenders against loss or damage occurring from liens, encumbrances, or defects in the title or actual ownership of a property;
- protects the owner from claims against the title that predate the purchase of the property;
- Protects the owner against forged documents, missing signatures, unknown creditors, and mistakes in the public records, undisclosed or missing heirs.
Lender’s title insurance:
- is a policy that protects the lender from any claims on the title for the property being purchase since the lender owns the property until they are paid back;
- only protects the lender against loss;
- covers banks and other mortgage lenders from unrecorded liens, unrecorded access rights, among other defects;
- Ensures the mortgage holder’s lien is enforceable.
If you would like a quote of what your title insurance may costs you, please give me a call, 508-846-6021.