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Title Insurance for Owners and Lenders
Lender's Title Insurance
For the life of the loan, a lender's title insurance, also known as a loan policy, protects the mortgage lender against any potential future title concerns. To protect their interests, lenders nearly usually demand lender's title insurance. This policy applies for the duration of the loan and regardless of its magnitude. A loan policy's coverage gradually reduces when the loan is paid off.
The borrower/homebuyer pays for the lender's title insurance, but it does not cover the buyer. To protect the homeowner from any title concerns, you are required to have separate title insurance.
Standard Owner's Title Insurance Policy
The same protection as lender's title insurance is provided by standard owner's title insurance, but it covers the buyer as well. The most prevalent potential threats to your title are covered by the standard owner's policy. This policy applies throughout the duration of the homeowner's ownership of the property, not just the term of the loan. Anyone who may inherit the property, act as the trustee of an estate-planning trust or become the trust's beneficiary is likewise covered.
Owner's title insurance covers a variety of dangers to your title, including, but not limited to:
- Errors in a document recording
- Forgery or fraud affecting the title in the past, such as counterfeit deeds or wills
- Heirs who have not been identified or who have gone missing
- Liens that have not been detected, including liens for unpaid taxes or HOA fees
- The cost of standard owner's title insurance is based on the home's purchase price and is paid at closing as a one-time fee.
Enhanced Owner's Title Insurance Policy
Homebuyers can also benefit from Palisades Title & Land's increased owner's title insurance coverage. This extended coverage goes above and beyond the regular owner's policy. It provides all the coverage offered by the basic insurance, plus additional coverage for a few less common hidden dangers to your title, such as:
- Covers rent and relocation expenses if you cannot use your home due to a claim
- Damage to existing structures or improvements due to easement access
- Existing HOA covenant violations
- Existing violations of zoning laws
- Mechanics Liens
The extended policy, unlike the normal owner's policy, also covers risks that arise after the deed has been recorded. Over the course of five years, the enhanced insurance amount automatically increases up to 150 percent of the home's value. Enhanced owner's title insurance is around 10% more expensive than normal owner's title insurance. For a more in-depth comparison of standard and enhanced owner's policies, go here.
