When it comes to Title Insurance, there are two main types: lender’s and owner’s policies. Each title policy provides important protection for buyers and sellers involved in real estate transactions. They are designed to cover problems that can occur before, during, or after the title process. Here is a helpful guide on the differences between owner and lender coverage.

Owner’s Title Policy

Most standard owner title policies are created to protect someone who buys property. The owner pays a one-time fee to secure the policy. If problems occur, the premium will pay for costs to correct them. Specifically, the policy covers any hidden problems during the title review process, which might include discovering unknown creditors, forgery, or errors in the public record.

An owner’s title policy also protects against other issues that can be found after an owner has bought the property. This might include zoning violations or inconsistent documents for establishing property boundaries.

In some cases, an owner’s title policy offers added reassurance to a lender during refinancing. For instance, if an owner discovers a defect while refinancing their property, their insurance will still help them proceed with the transaction.

Lender’s Title Policy

A lender’s title policy works in almost the same way: it protects the lender from undiscovered issues during the title review process. If a lender provides financing to a home or commercial property buyer, they will likely require the owners to purchase a lender title policy. The premium is generally based on the loan amount. As the loan is paid off, the premium typically decreases and is eliminated after the balance is paid in full.

Like owners, lenders want to protect their financial interests. Unfortunately, a number of issues can pop up during the title exam process. Improper subdivisions, undisclosed heirs, and forged mortgage documents are a few common concerns. 

Owner’s and lender’s title insurance policies can be a bit confusing. It helps to partner with a professional title company to navigate through the process. Since 1989, First Financial Title Agency of Minnesota, Inc. in Burnsville has helped individuals and business owners with title and escrow services. The team of experienced agents know the ins and outs of securing coverage to protect everyone’s interests. Call (952) 831-5010 to schedule a consultation with an attorney today. You can also visit the website for more information on obtaining a title policy.