By WWLT
If you own a home, we cannot emphasize enough that lender’s title insurance and owner’s title insurance are two completely different types of coverage. If you took out a loan to purchase your home, you were probably required to pay the premium for a title insurance policy. You may think that means you will be covered for title defects as long as you own your home, but nothing could be further from the truth. The premium you paid was for your lender’s title policy, and it does not cover you as a homeowner.
There are many important differences between lender’s and owner’s title insurance, and today, the team at World Wide Land Transfer would like to take some time to educate you about these differences so you can make the right decisions about coverage for your property.
When a lender loans you money to buy a property, they want to protect their financial interest in providing that loan. A lender’s title insurance policy is their way of doing that. Even though they will conduct a thorough title search before the loan is finalized, lenders know that undiscovered legal claims against the property could come up in the future.
For example, a lien against the property could surface. In this case, it makes sense for the lender’s title coverage to kick in so that you as the homeowner won’t have to pay the lien. That way, you won’t have any issues making your mortgage payment, and if the lender would have to take possession of the property, they would be able to sell it without any issues to recoup their losses.
Another party could also make a competing claim of ownership on the property, which would have to be resolved in court. If the homeowner didn’t have the resources to defend their ownership rights, they could lose title to the property, and would probably be unable to repay their loan. Again, it makes sense for the lender’s title policy to cover this scenario.
These are just two scenarios that could occur. A lender’s title policy will cover these and many other types of title defects as far as it is necessary to protect the lender’s interests. Remember that this coverage does not extend to the homeowner, and that the value of a lender’s title policy decreases over time, ending when the loan is paid in full.
Separate from a lender’s title policy, an owner’s policy is designed to provide many of the same protections to a property owner. Unlike a lender’s policy, property owners are not required to purchase this coverage, but we do strongly recommend it. In addition, because the coverage provided by a lender’s title policy decreases over time, and ends when the loan is paid, there will be a time when a property owner has no coverage at all.
By purchasing an owner’s title policy, you can ensure you are protected from many types of title defects from closing day until the day you sell your property. An owner’s title policy can even be transferred to your legal heirs to protect them after they inherit the property. For a one-time premium, an owner’s title policy can potentially provide decades or even generations of coverage. You can also add endorsements to your policy that will cover specific situations not covered by a standard title policy, like property line disputes, access issues, mineral extraction rights issues, and more. Reach out for more insight on how to obtain PA title insurance for owners.
For many first-time buyers, title insurance can seem unnecessary or redundant, especially when other types of insurance are already required during the home buying process. However, unlike homeowner’s insurance that protects against future damage, title insurance protects you from past issues—like unpaid taxes, forged documents, or undisclosed heirs—that could threaten your ownership rights. Without it, you could be financially responsible for resolving these problems on your own.
This lack of clarity is why we take the time to explain not only what title insurance is, but also why each part of the process matters. At World Wide Land Transfer, we believe that informed buyers are better protected.
Title insurance is an essential part of the real estate closing process, yet many people do not fully understand what it covers or why it is necessary. Understanding the terminology associated with title insurance can help you feel more confident during your transaction. Whether you are learning what a lien means or how a title search is conducted, becoming familiar with these terms can reduce confusion and help you avoid potential legal or financial issues tied to past ownership claims.
At World Wide Land Transfer, we believe the closing process should be clear and straightforward for every client. When you know the meaning behind the terms, you are more likely to ask the right questions, make informed decisions, and feel secure throughout your home buying or refinancing journey.
If you are planning on purchasing real estate in the near future, we suggest calling World Wide Land Transfer for a quote today! We work with homebuyers in communities all across the country, so call us no matter where you live, or where you would like to live. It’s also important to remember that you can purchase an owner’s title policy at any time, so if you haven’t thought about it before, now is the time to act! Don’t wait; get in touch with World Wide Land Transfer today!
World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.
