There are two different types of title insurance: an owner’s policy and a lender’s policy.
An owner’s policy protects you from title defects.
Title troubles—such as improper estate proceedings, pending legal action, outstanding mortgages, judgments, or liens against your property because the seller has not paid their taxes, forgery, fraud—could put your equity at risk.
If a claim is made against your property, title insurance will assure you of a legal defense (including the payment of court costs and related fees).
And if the claim proves valid, you can be reimbursed for your actual loss up to the face amount of the policy, which is usually the amount that you paid to purchase the property.
A lender’s policy is almost always required by the lender and protects the lender’s financial interests.
It ensures that your lender has a valid and enforceable lien (which is the mortgage or deed of trust) on the property. This protects the lender from losing out should any problems come to light regarding the title.
While they may sound similar, there are stark differences between these insurance policies.
Title insurance protects your ownership rights to the property, whereas homeowner’s insurance is a type of property insurance that protects against damage to your property. Title insurance also differs in that it comes with no monthly payment; it is just a one-time premium paid at closing.
On the other hand, homeowner’s insurance is a policy that you pay monthly, quarterly, or annually to continue coverage. Both are equally important in keeping your investment protected.
Title insurance protects your investment in your property from certain future legal claims regarding ownership.
The premium is directly related to the value of your home (in a purchase) and your mortgage amount. For a one-time fee—oftentimes cheaper than car insurance—you are provided complete coverage for as long as you and your heirs own the property.
Dexterrie C. Ramirez, Esq. is In-House Counsel at Flatiron Realty Capital LLC. She is responsible for identifying, communicating, and mitigating legal and compliance risk for Flatiron as it rapidly grows and expands.
After graduating from law school, Dexterrie spent five years as counsel and clearance officer at a title company where she coordinated and supervised the closings of multi-million dollar residential and commercial purchases and refinances.
Thereafter, Dexterrie spent eight years as an attorney in an AmLaw200 firm, where she represented developers, multi-generational family real estate holdings and other high net worth property owners in the resolution of matters associated with the construction and renovation of properties, as well as the acquisition and sales of properties, construction and mortgage financing.
Dexterrie was named one of New York Metro Super Lawyers Rising Stars in the Real Estate sector in 2015 through 2019, and was named Ones to Watch by the Best Lawyers in America in 2021.
Dexterrie received her JD from CUNY School of Law, holds a MA in Educational Psychology from New York University and a BS in Psychobiology from the University of California, Los Angeles. She is admitted to the State Bar of New York and State Bar of New Jersey.