Owner's Policy vs. Lender's Policy
Like all things legal, Title Insurance has a world of lingo to decode. It can be challenging to know what you need, when you need it, and why it’s important. This month, we’re covering one of our most frequently asked Title questions: What’s the difference between an owner’s policy and a lender’s policy? Let’s get to the bottom of it.
Lender’s Policy = The Lender’s Protection
A lender’s policy is usually paid for by you (or the seller). It’s almost always required by the lender for the real estate transaction to proceed, and it protects only the lender’s interests. For example, if someone sues making a claim against your home (and affecting the mortgage loan), the mortgage lender is protected from any losses by the lender’s policy. Your equity, however, would not be protected without an owner’s policy.
Owner’s Policy = Protects YOUR Investment
A title is your ownership rights to your property, and title insurance protects your investment and your property rights. While it’s not required by law or the lender to complete a real estate transaction, purchasing an owner’s title insurance policy is the best and surest way to protect your interests when buying property. You, the homebuyer, are covered as well as your trustees, inheritors, and beneficiaries.
Owner’s title insurance is the best way to protect your most important investment, and the legacy you leave your inheritors, from the most common title problems, including:
Forgery: If the seller makes a false document, for example, misrepresenting the identity of the person who signed the title, title insurance (owner’s policy) would protect you.
Fraud: If someone commits deception to achieve unfair gain, including phishing or wire fraud, an owner’s policy can protect you from catastrophic losses.
Human Error: Not all title problems are malicious, but they still cause issues. Something as simple as an unforeseeable discrepancy in the property or fence line can cause confusion in tracking the title history. If that happens, your owner’s title insurance protects your interests.
Your Protection = Our Priority
Owner’s title insurance lasts for as long as you or one of your heirs owns the property. At BNT, we want to help you protect your investment (and your legacy) for years to come. If you’re planning to buy property in Tennessee or Kentucky, our Title Attorney is here to help you get it done with peace of mind. Book your consultation today to learn how BNT keeps you protected every step of the way.
