Generally speaking, an Owner’s Title Policy is an insurance policy insuring the record owner of the real property from title problems that may arise after the purchase of the property, while a title insurance policy insuring the Lender’s interest in the real property is a Loan Policy of Title Insurance. The title insurance policies will provide assurance to the Insured in the title policy as to ownership of the real property, subject to any defects, liens, and encumbrances, except those listed as an exception in the title policy or, are excluded from the scope of the policy’s coverage.
Both types of title insurance policies will list the name of the Insured, the legal description of the real property, the insured value of the real property and/or loan value, and any exceptions to the coverage contained in the title policy (such as restrictions, easements, leases). Note that a Loan Policy does not provide any benefits or coverage to the Owner, therefore the decision to purchase an Owner’s Policy is independent of the Lender’s decision to require a Loan Policy.
Title insurance policies are underwritten by title insurance companies, such as those with whom GRS Title Services, LLC has an agency agreement, including Fidelity National Title Insurance Company, Commonwealth Land Title Insurance Corporation, Chicago Title Insurance Company, and First American Title Insurance Company. Title insurance policies are fairly uniform over the United States, and the title underwriter insurers must carry, at a minimum, the financial reserves required by the insurance regulators to compensate its insured for valid claims made under the title insurance policies. This is especially important for large commercial real estate transactions where millions of dollars are invested based on the assumption that the status of the real property title is valid.