Title Insurance

Title Insurance: Lender's Title Insurance Policy

Title Insurance for Lender's provide by Southeast Closing Services to protect your vested interest in the property that you finance.

It is important to know there are two types of title insurance:

Lenders Title Insurance - policy which protects the Mortgage professional, Lender, Broker, or Financial Institution
Owner's Title Insurance - Protects the owner (the home buyer after transfer of title).
As part of the real estate closing process, lender's title insurance is often required to protect the lender’s interest in the property when a loan is issued to the homebuyer. This policy will provide compensation for losses related to a potential title dispute not detected through the initial title search prior to the transfer of ownership.

Encumbrances and Defects of Title

Both Lender's Title Insurance and Owner's Title Insurance policies protect against title discrepancies that may come to light after the transfer of ownership such as levies, liens, forgery, fraud, inaccurate records, and various other events that could challenge the ownership of or rights to the property under previous ownership. However, prior to issuing title insurance policies, a thorough title search will normally reveal these defects of title.The title search may also reveal clerical errors, examination mistakes, previously undisclosed heirs and forgery. Resolution of these defects, also known as encumbrances, are usually resolved prior to closing.  However, in the event that a flaw goes undetected until after the transfer of title, the title insurance policies will protect from financial loss that may result due to the discovery.

A Title Agent will issue the Insurance policies upon completion of the a Title search

During the closing process, a thorough title search of the property is conducted. Along with an extensive review of the title, the search also reviews records on tax sales, water and sewer bills, bankruptcies and probate records associated with the property. The title search process will disclose the history of the title and ultimately determines if the current owner has the right to sell the property. However, title searches may also A title insurance policy will protect against issues that are unresolved by previous owners or estates prior to the transfer of ownership.

Lenders Title Insurance vs. Owner's Title Insurance

It is important to know that a Lender's Title Insurance policy protects the lender’s investment only. Most lenders require a Lender's Title Insurance policy, or loan policy, that covers their interest in the property for the duration of the loan. A separate owner’s title insurance policy is recommended to protect the homebuyer’s interest should a claim which occurred during previous ownership arises. Both policies can provide protection against lawsuits, liens, and levies not identified during the title search prior to the closing.  Unlike property and life insurance policies, title insurance policies cover a specified time frame ending on the date of the purchase and remain in effect until a transfer of ownership or refinancing the property. The lender’s title insurance protects only the lender for losses incurred from pre-existing claims such as a lawsuit challenging the title of the property or a lien against the property for a previous owner’s uncollected debts.

Lenders Title Insurance Coverage and Fees

Including the premiums for the Lender's title insurance in home buyer's closing cost is standard procedure.  The amount of the mortgage loan or financing will determine the premiums of the Title Insurance.  Although it is uncommon, home buyers can request that the seller pays the title insurance premium to verify the title is clear prior to transfer.