What Is Owner’s Title Insurance and Is It Required?

For most Americans, purchasing real estate is among the biggest financial investments they will make in their lifetime. To help safeguard such a valuable asset, buyers typically purchase homeowner’s insurance to protect against financial loss should a natural disaster or other unfortunate event impact the home or its assets.

But what if another party is able to claim an ownership stake in the property? Such a claim would be the result of a “title defect,” and would not be covered under homeowner’s insurance. An owner’s title insurance policy, however, could help protect the homeowner should title defects arise weeks, months, or even years after they have purchased the home. Read on to learn more about owner’s title insurance and whether or not it is required when purchasing real estate.

What Is Title Insurance?

Title insurance is an indemnity policy designed to protect a party’s financial interest in a given property should a valid claim threaten their ownership rights. There are essentially two forms of title insurance: lender’s title insurance and owner’s title insurance. Lender’s insurance protects the mortgage lender in the event the loan becomes unenforceable during the repayment period. Owner’s insurance protects the homeowner should title defects surface any time after they close on the home.

There are a wide variety of title defects that may occur. Some of the most common include recording errors, improperly probated wills, liens, judgments, and unreleased deeds of trust. While recording errors and other types of defects may be relatively easy to resolve, others could be costly and incur legal fees. An owner’s title insurance can help mitigate such costs.

What Are the Benefits of Owner’s Title Insurance?

Owner’s title insurance provides several key benefits. It can help cover legal fees should it become necessary to defend ownership rights in a court of law or remunerate the homeowner if the property is lost to a valid ownership claim. An owner’s policy will remain in effect until either the homeowner or their heirs no longer own the property. In all, it can help provide lasting protection and peace of mind.    

Do I Have to Buy Title Insurance?

Most lenders require a homebuyer to purchase a lender’s insurance policy at the time of the real estate sale. Owner’s title insurance is entirely optional. However, it is highly recommended for the reasons listed above. Both premiums are remitted in a one-time payment at the time of closing. Visit our title insurance page to learn more about these types of policies.

Learn More About Title Insurance

Buying a home is a major milestone in a person’s life. Title insurance can help protect their investment and safeguard this valuable asset. To learn more about title insurance, please contact Linear Title & Escrow in Virginia Beach, VA today.


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