What is Title Insurance and Who Pays For It?
There are typically two types of Title Insurance: an Owner's Policy and a Lender's Policy. This post will explain what each policy is for, who and what it covers and who pays for it.
The Owner’s Policy insures the homeowner against defects in the title that were not found during the title search. It is a one-time fee paid at closing and covers the owner or his heirs as long as they have an interest in the property.
Hidden title problems that may later arise include:
- Undisclosed heirs
- Errors or omissions in the deed
- Mistakes in examining the records
This policy may be paid by either the buyer or seller, depending on what is traditionally done in that location.
The Lender’s Policy (or "Loan Policy") protects the lender’s interests in the property should a problem with the title be uncovered. The Lender's Policy is typically paid for by the buyer.
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