Title insurance provides protection and peace of mind on what is likely to be your biggest purchase ever – your home! Coverage ensures “clear” title on a property; in other words, it provides a guarantee that the new owner is, in fact, the rightful owner and is free and clear of any claims from prior owners. A few examples of what title insurance covers includes outstanding lawsuits or liens, conflicting ownership claims (such as will complications), fraud or forgery, or flawed public records.

Title insurance is typically ordered shortly after a property goes under contract, and the process of ensuring clear title includes searching extensive records, tracing chain of ownership, and removing/addressing any existing liens. (Learn more about the “behind-the-scenes” of title insurance by clicking here.)

If you’re purchasing a property and securing a mortgage, the answer is almost always “yes”, as the lender will require a Lender’s Policy. This policy is paid as a one-time premium on settlement day and based on the loan amount. Additionally, the Lender’s Policy solely protects the lender and provides no coverage for the buyer. An Owner’s Policy, to protect the buyers, is optional but strongly recommended; the Owner’s Policy is also paid as a one-time premium, this time based on the sale price. Thankfully, when a Lender’s and Owner’s policy are issued simultaneously, it is paid only one time; in other words, the one-time fee is paid based off of whichever dollar amount is higher, either the sale price or the loan amount. (We understand that this can sound a little complicated – please don’t hesitate to contact us with any questions!)

If you’re purchasing a property and not securing a mortgage, selecting an Owner’s Policy is optional. The vast majority of buyers secure an Owner’s Policy, however, and for liability reasons, Security Abstract and our underwriting partners require buyers to sign a waiver if choosing to forego title insurance coverage.

If you’re refinancing, a Lender’s Policy will need to be purchased to satisfy lender requirements, but an Owner’s Policy is not necessary, as the original coverage remains in effect for as long as the property is owned.

There are two types of title insurance: An Owner’s policy and a Lender’s policy. The Owner’s Policy is issued on the day of settlement, and covers the buyers (or their heirs) for as long as they own the property. A Lender’s policy, by contrast, protects the lender – and only the lender – in the case of any title defects. It is exceedingly rare for a lender to waive their requirement for a Lender’s Policy. The Lender’s Policy is issued in the amount of the mortgage whereas the Owner’s Policy is issued in the amount of the sale price.

If the seller is in attendance, they will receive a title check on settlement day unless other arrangements have been made in advance (for example, wiring directly to a bank account). When sellers are purchasing another home the same day, it is recommended to have the funds wired to their bank account so that they may quickly draw on them for their next settlement.

If the seller is NOT in attendance, the seller has the option to have a title check overnighted to their home, or to have funds directly wired to their bank account.