Why Two Title Policies Are Required

Nearly every sale of a residential property involves the purchase of two policies of title insurance, an Owner's Policy and a Lender's Policy

For the Seller
The purchase of a home is one of the most expensive and important purchases most of us ever make. Your buyer will want to make sure that the property is indeed yours to sell and that there are no unknown liens, claims, or encumbrances held against the property. Your buyer will choose your property for its features and amenities. Enhancing these amenities with an Owner's Policy of title insurance from a reputable title company is just as important as the work you put into maintaining and improving your property.

For the Buyer
For most of us, buying a home requires help with financing the purchase price. Your home loan is secured by the new home you are buying. Your lender will want to make sure that the security for their loan is protected by title insurance and that you are the owner of record. The Lender's Policy of title insurance insures your lender, and any purchasers or assigns of the loan, that their lien has priority over the liens not shown in the policy. Many lenders condition their loans upon the purchase of a Lender's Policy.

According to real estate custom and practice, the seller pays a one-time premium for the new buyer's Owner's Policy based on the sales price of the property. The title company searches the public records to identify and eliminate risks. The new buyer's Owner's Policy indemnifies the buyer against loss and provides a defense in the event of claims against the title pursuant to the terms of the policy. For a one-time charge, the buyer's Owner's Policy protects the buyer for as long as the buyer owns the property.The buyer is typically responsible for paying the one-time premium to provide the Lender's Title Policy based on the loan amount.

The premium payments are typically collected and disbursed at closing, at which time the policies take effect.

For more information, please call me: 858-603-7879