A Guide to Owner’s Title Insurance Policies & Lender’s Title Insurance Policies
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What Are Title Insurance Policies?
“Title” refers to the legal possession or ownership of real estate. However, because real estate is imperishable, there’s usually a long list of title holders and title transfers before the property gets to the present owner. Along the way, there could be defective transfers of title, unpaid liens, or other third-party claims that could diminish the value of the title.
The good news is that a routine title search would reveal most of these title defects, so the new owner or lender is aware of them.
But beyond being aware, there is a need for an added layer of protection for the party with the most to lose if the title is proven defective.
This is where insurance policies come in. So, if you’re the lender or purchaser in a real estate transaction or mortgage, it is important that you understand the title insurance policy applicable to you and the extent of protection you can get.
What Is Owner’s Title Insurance?
Owner’s title insurance policies protect you as a property owner from financial loss caused by defects in the title to your property.
For a one-time premium, the owner’s policy covers your attorney fees and court costs if you have to defend yourself against a competing claim to your title. The policy will also protect you from legal action by the state for unpaid property taxes by the previous owner.
Differences Between Lenders’ and Owners’ Title Insurance
Who Pays for Title Insurance Policies?
Title insurance policies protect the party that has the most to lose if there is a defect in the title- lenders and owners.
The borrower usually pays for the title insurance premium for the lender’s title insurance since it is required for the grant of loan facilities.
On the other hand, the seller or buyer in a real estate sale may be responsible for title insurance costs depending on who pays for the transaction closing costs. If you intend to purchase real property, you can make sure that the seller provides title insurance during your negotiations.
Get Help From With Your Title Insurance and Real Estate Transaction at Perigon Legal Services
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