Lender’s Title Insurance vs. Owner’s Title Insurance

Lenders’ and owners’ title insurance are confusing real estate terminology, especially for people buying a home for the first time. Homebuyers must understand the difference between these two terms. Here, we’ll break down these two real estate terms.

What Is Lender’s Title Insurance?

Lender’s title insurance is a type of policy that protects a lender against losses due to title defects on a property. It is typically required by a lender when they provide financing for real estate purchases. The policy covers the lender if a dispute arises over the title to the property, such as an undisclosed lien or claim. It also protects if any title documents are fraudulent or invalid.

What Is Owner’s Title Insurance?

Owner’s title insurance is a type of insurance that covers the owner of a property against losses resulting from defects in the property title. It is typically issued with a loan transaction and covers both lender and owner interests. In addition, it protects against claims or losses arising from matters that were not disclosed or discovered during the title search process. Such matters include forged deeds, undisclosed heirs, mistakes in public records, liens, and encumbrances.

Do I Need Both?

Yes, you need lender and owner’s title insurance. The lender’s title insurance protects the lender in case there’s any issue with the property title. The owner’s title insurance covers the homeowner. Owner’s title insurance is optional, but it is recommended as it can provide financial protection against any unforeseen property title problems.