Heritage Council Neighborhoods What Is an Owner’s Policy in Real Estate

What Is an Owner’s Policy in Real Estate


What Is an Owner’s Policy in Real Estate?

When purchasing real estate, whether it be a residential property or a commercial building, it is important to protect your investment. One way to do this is by obtaining an owner’s policy, also known as an owner’s title insurance policy. An owner’s policy is a form of insurance that protects the buyer or owner of a property from any financial loss due to defects in the property title.

Title defects can arise for various reasons, such as errors or omissions in public records, undisclosed liens or encumbrances, forgery or fraud in the chain of title, or even unknown heirs or missing wills. These defects can potentially result in the loss of ownership or financial loss for the property owner. However, an owner’s policy provides coverage against these risks.

When a property is being sold, a title search is conducted to ensure that the title is clear and free from any defects. However, even with a thorough title search, some defects may not be discovered. This is where an owner’s policy comes into play. It provides protection to the owner if any undisclosed defects surface after the purchase.

An owner’s policy typically covers the cost of legal defense if someone challenges the title, as well as any losses incurred due to a defect in the title. It provides peace of mind to the property owner, knowing that they are protected against potential financial loss.

FAQs about Owner’s Policies in Real Estate:

1. Do I need an owner’s policy if I already have a lender’s policy?
Yes, a lender’s policy only protects the lender’s interest in the property. An owner’s policy is necessary to protect your investment as the property owner.

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2. How much does an owner’s policy cost?
The cost of an owner’s policy varies depending on the property value and the insurance provider. It is usually a one-time payment made at the time of closing.

3. How long does an owner’s policy last?
An owner’s policy lasts as long as you own the property.

4. Is an owner’s policy transferable?
No, an owner’s policy is not transferable. If you sell the property, the new owner will need to obtain their own policy.

5. Can I purchase an owner’s policy after the sale?
Yes, but it is recommended to purchase it at the time of closing to ensure immediate protection.

6. Can I choose my own title insurance company?
In some cases, the seller or lender may have specific requirements for the title insurance company. However, you can still negotiate with them or request a different provider if you prefer.

7. What happens if a title defect is discovered after the purchase?
If a title defect is discovered, you can file a claim with your title insurance company. They will investigate and provide coverage for any losses incurred.

8. Does an owner’s policy cover boundary disputes?
No, boundary disputes are typically not covered by an owner’s policy. This is a separate issue that may require legal assistance.

9. Can I cancel my owner’s policy?
Yes, you can cancel your owner’s policy, but you may be entitled to a partial refund depending on the time since the policy was issued.

10. Can I increase coverage on my owner’s policy?
Yes, you can request additional coverage, known as an enhanced owner’s policy, for an extra cost.

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11. Should I get an owner’s policy if I’m buying a newly constructed property?
Yes, even new construction properties can have title defects. An owner’s policy is still recommended to protect your investment.

In conclusion, an owner’s policy in real estate provides essential protection for property owners against potential title defects. It offers coverage for legal defense and financial losses, giving peace of mind to the owner. Obtaining an owner’s policy is a wise decision when purchasing any property, ensuring your investment is safeguarded.