Title Policy FAQs

What is a Lender Policy:

The loan policy protects the mortgage holder or lender’s interest. A loan policy covers up to the amount of the principal on your loan.

Loan policies are effective until you repay the loan. Lenders will require you to buy a new loan title policy if you refinance your home. When the new loan pays off the existing loan, the old loan policy expires. You will get a premium discount on a new loan policy if you refinance within seven years.

What is an Owner’s policy:

The owner’s policy protects the buyer’s interest in the property. The policy protects you from the covered risks listed in the policy. The price of the policy is usually included in your closing costs. An owner’s policy only covers you up to the value of the property at the time you bought the policy. It doesn’t cover any increase in your property’s value, unless you buy an increased value endorsement.

An owner’s policy remains in effect as long as you or your heirs own the property or are liable for any title warranties made when you sell the property. You should keep your owner’s policy, even if you transfer your title or sell the property.

Why you need title insurance:

Title insurance protects people from losses arising from a real estate purchase. Losses may be caused by things such as unknown liens, defects, or encumbrances on the property that existed before the purchase.

Examples include:

  • outstanding property taxes not paid by the previous owner;
  • fraud or forgery of a previous deed; and
  • a spouse or unknown heir who makes a claim against the property.

Title insurance agents will identify defects in the title that need to be corrected before the owner of the land sells it to you. Agents will check for problems with your title by looking at public records, including deeds, mortgages, wills, divorce decrees, court judgments, tax records, liens, encumbrances, and maps.

A title insurance policy also protects right of access to the property.

What is ALTA Best Practice?

What are the best practices? ALTA’s Title Insurance and Settlement Company Best Practices are a benchmark for the real estate settlement and mortgage lending industries. They illuminate the high level of professionalism that ALTA members follow to protect consumers and businesses in the real estate and mortgage settlement.

Why did ALTA develop these best practices? Recently, regulators, consumers and investors have increased their pressure on lenders to know more about the service providers they do business with. To help meet this need, ALTA developed the best practices to help members highlight policies and procedures the industry exercises to protect lenders and consumers, while ensuring a positive and compliant real estate settlement experience.

Are these best practices mandatory? These best practices are a voluntary tool to help the title industry highlight the safeguards in place to ensure that closing activities meet all applicable laws and regulations.

For any additional questions, please contact us. We look forward to serving your Title Policy needs.