What is owner’s title insurance and how is it different from lender’s title insurance?


Owner's title insurance protects the home owner in the event that claims against the title of the property will arise.

In contrast, the lender's title insurance protects the lender against various title defects.

You see, it is important for you as the home owner to be able to prove that you are the rightful owner of the house, and that the property was transferred fully to you. This is vital in that claims may arise that can mean that you do not really own the policy or that the value of the property is somehow diminished because of a problem in the title.

An owner's title insurance looks into the "chain of title", which outlines the transfers of ownership of a property from one person or group to another. With an owner's title insurance, you seek to protect the title from any problems or "clouds". The first thing that will be done when you order an owner's title insurance will be a title check to see whether there is a clear chain of title. Then the title searcher will issue a title opinion, after this the title insurance is issued.

The title insurance will protect against problems that makes your ownership of your property questionable because of:

  • Acts of fraud in the past (i.e. someone forged the signature of the rightful owner, misrepresented himself as the owner, or did not reveal the presence of other heirs to the property)
  • Mistakes made documentation of legal papers
  • Liens attached by subcontractors as well as because of unpaid real estate, local and federal taxes

You need only to pay for your title insurance once. And then, as long as you and your heirs are the owners of the property, the coverage remains effective. Once the property transfers ownership to another party, then that is the time that the insurance ceases to become effective.

An owner's title insurance is optional, but it is good to have. That way, you have the confidence that you will not lose ownership or you will have financial help when it comes to facing the loss of your title, the loss in value of your property, payments you have to face, or some changes you have to make with regards to the structure of your house.

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