Question: “I’m at the finish line of my closing, but I see two charges: one for the Lender’s Title Insurance and another for Owner’s Title Insurance. Do I actually need to pay for both?”
Answer: This is a classic “closing table” dilemma that goes viral every home-buying season. It can feel redundant to pay for two policies, especially if the seller seems like a trustworthy person who has lived there for decades. However, understanding the difference between the two is vital for your long-term financial safety.
Lender’s vs. Owner’s: What’s the Difference?
First, Lender’s Title Insurance is non-negotiable if you are taking out a mortgage. Commercial lenders require this to protect their investment in the property. In some cases, builders or sellers may cover this cost to sweeten the deal, but the policy only protects the bank—not you.
Owner’s Title Insurance, on the other hand, is technically optional but highly recommended. While the lender’s policy covers the amount of the loan, the owner’s policy covers you against losses resulting from title defects—whether they are known or completely hidden at the time of the sale.
Why “Trust” Isn’t Enough
You might trust the seller, but title issues often have nothing to do with the person currently living there. Title insurance isn’t like auto or homeowners insurance, which protects against future accidents. Instead, it protects you against past issues that are already in effect but haven’t been discovered yet.
Viral “What-If” Scenarios:
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The Unauthorized Signer: A deed is conveyed by someone in bankruptcy who had no legal authority to sign.
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The Forgery: A previous “buyer” forged a seller’s name years ago to transfer the property.
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The Hidden Lien: An unpaid contractor filed a mechanic’s lien against the property that didn’t show up in a standard search.
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The Tax Sale: The home was sold at a tax sale in the past, creating a “cloud” on the title that could jeopardize your ownership.
The Bottom Line
When a seller bought the home years ago, their policy covered risks up to that point. Anything that happened during their ownership—liens, judgments, or legal disputes—is a new risk for you.
While the choice to get an owner’s policy is yours, the risks of going without it are significant. It is a one-time fee that provides a lifetime of protection. Before you sign those final documents, we always recommend reviewing the sale with an attorney to ensure your equity is fully protected.
A Better Way to Close with jbensonNotary
Since 2008, jbensonNotary has been the trusted partner for New York title agencies, mortgage lenders, and savvy homeowners who want a flawless closing. We know that by the time you reach the signing table, you want certainty, not surprises.
At jbensonNotary, we provide the ultimate precision. We “touch” every single file 8 or 9 times to ensure that every signature is perfect and every identity is verified, helping to prevent the very forgeries and errors that title insurance is designed to cover. With over 250,000 successful signings in all 51 jurisdictions and an elite 96% closing ratio, we are the bridge to your new home.
Ready for a secure, professional closing? Visit www.jbensonNotary.com to get started today!
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