Owner policies protect the owner. A title insurance owner policy is a one-time fee protection for as long as you or your heirs own the insured interest in the property. An owner’s interest is not covered under a lender policy; but it does protect the owner from unknown heirs to property and other similar issues that may arise.
A purchaser policy is issued to real estate purchases under a contract for deed.
A lender policy protects the lender from any loss due to unknown title defects and other conditions which may exist but not be known at the time of sale. Lenders want to protect their investment, so they will purchase the lender policy as a standard part of the loan process. It also guarantees the new mortgage provider is in first place. This lender policy does not protect the owner’s interest in the property, nor does it protect ownership rights.
A leasehold policy insures the owner of the leasehold estate and provides coverage similar to that in an owner policy. The leasehold policy delivers a definition of a “leasehold estate” and the method regarding valuation of the leasehold estate for claims purposes.
Title insurance is an insurance policy that protects you against loss that could result from defects in the title of the property you are buying. The premium is paid only once and is good until the property’s ownership changes. Unlike most types of insurance which protect policyholders from future events, title insurance protects you against defects that could already exist.
The title insurance policy is purchased at closing for a one-time premium, based upon the loan amount and/or purchase price. However, the preparation that leads to the title insurance policy being issued begins in the very early stages of the closing process.
A title insurance policy guarantees that the property you are purchasing is free of undisclosed liens, confusion in the rights of ownership, and other clouds on the title. Clouds of title can include mistakes in recording legal documents, clerical errors in public records, undisclosed or missing heirs, invalid divorces, misrepresentation of marital status; or invalid mechanics liens.