Buyers and lenders need title insurance in order to be insured against various possible title defects. The buyer, seller and lender all benefit from issuance of a title insurance policy.

Because title insurance protects both home buyers and lenders, there are two types to suit the end user’s needs:

• A lender’s policy is generally required when a lender issues a mortgage loan. The loan policy is usually based on the dollar amount of the loan and it 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 each year and eventually disappears as the loan is paid off.
• An owner’s policy, purchased at closing, provides coverage for the homeowner. It is usually issued in the amount of the real estate purchase and is valid for as long as the owner or his heirs have an interest in the property. Only an owner’s policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include:
  • Errors or omissions in deeds
  • Mistakes in examining records
  • Forgery
  • Undisclosed heirs

There are two types of owner’s title insurance policies certified by the American Land Title Association® (ALTA®):

• The owner’s policy protects you from defects and liens in the history of your title through the date and time your deed is recorded in the public records.
• The homeowner’s policy takes your protection to a higher level by providing coverage for many additional risks, including some that might occur after the deed has been recorded. The Homeowner’s policy protects against many common, frustrating problems, and the policy protects your investment for as long as you or your heirs own the property.