Title Insurance

Title insurance protects the insured from claims regarding ownership of the property, liens against the property, and marketability of title to the property.

• Title insurance companies offer two types of policies:
  • the mortgagee policy protects the lender,
  • the owner's policy protects the buyer.

Mortgagee policy-- when a claim results in a total loss of title, the title insurance company buys the existing mortgage loan from the lender. This lender is, therefore, compensated for its loss, and the title insurance company, in turn, becomes the new holder of the loan.

• The mortgagee policy protects only the lender and does not afford any protection to the buyer.
• An uninsured buyer would still be responsible for repaying the mortgage to the title insurance company, despite the fact that he no longer actually owns the property.
• The uninsured buyer would also lose any equity he may have in the house.

Owner's policy--insures the buyer against loss resulting from a title claim and typically includes reimbursement to the buyer for court costs and attorney fees associated with the claim.

• Title insurance is a one-time premium, and the policy is written by the closing attorney or settlement agent.
• Title insurance is typically a line-item charge on the settlement statement.
• Cook & James, LLC strongly recommends that every buyer purchases an owner's policy of title insurance.