Title insurance policies protect the homeowner and mortgage lender if the title to the property is found to be invalid or unenforceable.
When property is purchased, the homeowner and mortgage lender are invested in protecting their legal claims to the real property. A title insurance policy will cover the policyholder in the event there are defects in the property's title. Title insurance protects the insured against issues that do not show up during a title search and events that occurred prior to the purchase of the property that may compromise the homeowner's title.
Basic Owner's Policy
The Basic Owner's Policy assures purchasers that they own the title to the property and the title is free from all defects, liens and encumbrances, except those listed as exceptions or excluded from the policy's coverage. The liability limit of the owner's policy is the purchase price paid for the property. Typically, no additional premium is paid after the policy is issued and coverage lasts as long as the owner retains an interest in the property.
Lender's Policy
The Lender's Policy is issued to mortgage lenders. The policy protects lenders if their mortgage lien is not enforceable or valid. The monetary value of the policy is usually the equivalent of the loan amount provided to the borrower. The lender will be protected if the borrower is not the legal title owner of the property or if another entity has a priority lien on the property. The lender is protected until the mortgage has been paid in full.
Extended Owner's Policy
The Extended Owner's Policy provides coverage for incidences not included in the basic owner's policy. While the basic owner's policy covers events in the past that may affect the validity of the homeowner's title, the extended owner's policy protects the homeowner against title issues that may occur after the title insurance was purchased. Covered events include encumbrances, encroachments, or zoning violations that occur after the property has been purchased.
Tags: Owner Policy, property title, Basic Owner Policy, basic owner policy, Extended Owner, homeowner mortgage
