First-Time Buyer Dilemma:
“As first-time homebuyers, we’re carefully managing our finances to cover the down payment, closing costs, and moving expenses. Our lender’s closing cost estimate listed ‘Owner’s Title Insurance’ as optional, yet mandated ‘Lender’s Title Insurance.’ What’s the distinction, and are both truly necessary? — Duane”
Safeguarding Your Property Ownership:
“Title insurance shields your investment against claims arising from title defects, encompassing the property’s historical ownership. This protection encompasses issues like fraudulent transactions, errors in deed recording, undisclosed heirs, forged documents, and outstanding liens that jeopardize your ownership.
In the event of a title dispute, the insurer addresses the problem, typically by providing legal representation or financial compensation.”
Two Key Title Insurance Types:
- Lender’s Coverage: Protecting the Loan
- Owner’s Coverage: Protecting the Homeowner
Lender’s Policy:
Usually the buyer’s responsibility. “Most mortgage lenders demand a lender’s policy to secure their loan. This policy ensures that if a title issue surfaces, the lender is financially reimbursed for their invested capital.”
Owner’s Policy:
Often the seller’s contribution. “Without an Owner’s Policy, the buyer is vulnerable. While the lender’s interests are protected, the homeowner could face losing their property or dealing with substantial legal complications. Owner’s title insurance mitigates this risk, making it a crucial investment.”
Cost-Effective Security for Significant Investment:
“Considering it covers the entire purchase value of your home for the duration of your ownership, title insurance is a prudent expense. Moreover, acquiring an owner’s policy often unlocks a significant discount on the required lender’s policy, due to overlapping coverage.
“From my legal perspective, securing an owner’s title insurance policy is a fundamental safeguard I would never overlook when purchasing real estate.”
~ Insights from Board-certified real estate attorney Gary Singer, as featured in a Sun Sentinel special, published January 9, 2025.