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Rainer
462,723
Clay R. Seay
Florida Homes Realty & Mortgage - Saint Augustine, FL

Peter,

My understanding is that the Owners Policy is usually paid for by the Seller to ensure there are no claims against the new owner of the property from the past of any liens or claims on the property ownership or the right to transfer the property.

The Lenders Policy is usually paid for by the Buyer as part of having a mortgage and would protect the Lender's investment and not be as concerned with protecting the new owners position.

If there is no mortgage, there is no Lender's Policy, but there is generally an Owners' Policy.

Nov 10, 2023 02:28 PM
Ambassador
3,348,169
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

Lender’s Title Insurance protects the lender.

Owner’s Title Insurance protects the owner in case someone tries to make a claim on the property. 

 

Nov 10, 2023 02:32 PM
Rainmaker
1,055,342
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

David M. Dwares should be able to fully explain.

The main difference to me is who the insured is.

Owner's policy insures the property owner
Lender's policy insures the lender

Nov 10, 2023 01:38 PM
Rainmaker
1,568,684
Gary Frimann, CRS, GRI, SRES
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker

Kathleen Daniels, Probate & Trust Specialist explained it simply and precisely. 

Nov 10, 2023 05:31 PM
Ambassador
2,684,459
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

The Title Company is supposed to defend against Title Problems (as defined in "The Policy").   Whether on behalf of the Owner, or on behalf of the Lender, that depends upon who is the Named Insured (aka the Policyholder) on the Declarations page.

 

But being an Insurance company, you may encounter the usual "Delay, Deny, Defend" tactics that are commonplace to Insurance Companies.   

  Seek legal counsel if necessary.

Nov 10, 2023 05:22 PM
Ambassador
3,166,683
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

what kind of issue do you have?  Someone making a claim on your property?  Title insurance is extremely limited in what it covers and generally speaking it has to be a claim of ownership that someone thinks is valid.  

A case study I use in teaching is a subdivision (original farm) where one sibling and a fraudulent girlfriend pretending to be his sister sold the farm and spent the money and the sister returned and owned a LOT of homes and people with title insurance (owners policies) got their money, people with only a lenders policy the bank got their money and owners lost all equity in their homes.  There were more than 100 homes.  The sister who had legal 50% ownership got to sell all of them and her brother who was in jail got zilch.

Nov 10, 2023 02:26 PM
Ambassador
5,250,191
Debe Maxwell, CRS
Savvy + Company (704) 491-3310 - Charlotte, NC
The RIGHT CHARLOTTE REALTOR!

Simply put - as a buyer you want BOTH - lender's policy protects the mortgage, owners policy protects the owner!


As for the owner's policy, it's a one-time, very CHEAP insurance policy, Peter! Buyers should NEVER decline it!

Nov 11, 2023 07:34 AM
Rainer
380,357
Don Baker
Lane Realty - Eatonton, GA
Lake Sinclair Specialist

I don't need to be a lender to know that owner's protects the owners and lender's covers the loan against claims.

Nov 10, 2023 02:20 PM
Rainer
195,522
Karen Climer
Demetree School of Real Estate - Orlando, FL
Teaching people to pass the real estate exam

As others have said the owner's policy protects the owner, lender's policy protects the lender. 

Also, lender's policy is transferable (for when the loan is sold to other banks).  Owner's policy is not transferable. 

Lastly, owner's policy is for the price of the house.  Lender's policy is for the amount of the loan.

Nov 11, 2023 04:52 AM
Rainmaker
5,232,478
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Without having to go into a long dissertation, I am going to agree with Kathleen Daniels, Probate & Trust Specialist and move on.

By the way, it used to be custom if a title company paid a claim it would spend an equal amount or more to advertise the fact.

Nov 11, 2023 04:21 AM
Ambassador
6,409,891
Bob Crane
Woodland Management Service / Woodland Real Estate, KW Diversified - Stevens Point, WI
Forestland Experts! 715-204-9671

I believe that one protects the buyer's interest in the property, and the other the lenders interest.

Nov 11, 2023 01:17 AM
Rainmaker
4,172,105
John Pusa
Glendale, CA

Hello Peter Mohylsky, Beach Expert  In my opinion Kathleen Daniels, Probate & Trust Specialist explained properly. Hope it will help.

Nov 10, 2023 06:00 PM
Rainmaker
7,855,557
Roy Kelley
Retired - Gaithersburg, MD

There are two types of title insurance: a mandatory lender’s policy that covers the lender, and an optional (but recommended) owner’s policy that covers the homeowner. These insurance policies protect both parties from financial loss in the event that an issue or dispute predating your purchase of the property emerges.

Nov 11, 2023 09:18 AM
Rainmaker
2,396,773
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Peter Mohylsky, Beach Expert  I had an interesting situation once where the owners lost their abstract in our flood and checked to see if they had title insurance, they did not BUT the bank did. The owners were told they could NOT use the banks title insurance to rebuild or claim their ownership and had to pay about $3,000. to have a new abstract built. 

Nov 11, 2023 07:12 AM
Ambassador
4,710,464
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

It has been explained to me, but I will leave it to the experts since I don't want to misspeak in any manner with regard to it.

Nov 11, 2023 04:22 AM
Rainmaker
2,188,669
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

I’ve had buyers want to stop at lenders covered

Nov 11, 2023 09:05 AM
Rainmaker
5,109,379
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

It's simple. A lender requires title insurance for the portion of the home they hold as collateral. That means there's a piece of the value of the home that is not insured unless the new owner pays for it. So if someone puts down 20%, lender requires title insurance for 80% of the purchase. Buyer has a choice to insure or not the remaining 20%. The incremental buyer insurance is usually not a big amount. It's penny wise and pound foolish to not insure.

Nov 11, 2023 05:45 AM
Rainmaker
471,632
Katina Hargrove 352-551-0308
Stake Your Land Realty, Inc. - Eustis, FL
Broker/Owner, SFR®, e-PRO®, GRI, AHWD, REALTOR®

YES!

Nov 11, 2023 04:54 AM
Rainmaker
905,306
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
NC Real Estate Transition & Relocation 919-602-848

The lender's title insurance is usually paid for by the seller and protects the lender's interest up to a particular dollar amount. I believe it only covers the amount they're lending on. 

Owner's title insurance protects the interest of the owner and usually covers the entire value. 

 

Nov 11, 2023 04:41 AM
Rainmaker
1,319,582
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

I think the difference between the two has been explained by others here.

On a cash purchase, there is no lender, so no lender's insurance. A buyer could forego owner's converge in this case but I would strongly advise against doing so.

By the way, in our area, the title company and escrow company are one and provide both functions.

I the area where I practice...in one part, the seller pays for owners insurance and the buyer pays for lender's insurance...in the other part, the buyer pays for owners and lender's insurance.

 

Nov 12, 2023 08:37 AM