There are two different kinds of title insurance policies: lender’s and owner’s. Almost every lender in a consumer transaction will require that the purchaser buy a lender’s title insurance policy to protect the lender against title defects from the past. But lenders do not require that purchasers buy title insurance to protect their own interest in the property.
Over the years, we have seen hundreds if not thousands of title defects. We firmly believe that purchasing property without an owner’s title insurance policy is a foolish decision.
So why do you need title insurance for yourself if a title examination has been conducted? The title examination is performed for the benefit of the mortgage company and it only protects the lender against defects (mortgages, liens, delinquent tax bills, etcetera) that are actually discovered in the exam. There are many potential defects in a title which might not actually appear in the exam, or which might be missed in the exam.
The owner’s title insurance policy will cover legal fees as well as your equity in the property, up to the policy limits (which is usually your purchase price) for covered defects that occurred prior to your ownership of the property but which are discovered after you buy the house.
If you’re wondering what the potential title defects that might affect the property you’re purchasing are Click here, The list is quite extensive and without an owner’s title insurance policy, you won’t be protected against any of them
Feel free to contact the expert real estate attorneys at Borders and Borders if you would like to discuss title insurance in more details.