The Lender's Policy of Title Insurance is a fee required by most mortgage lenders, and will protect the lender until you sell or re-finance the property from such title risks as forged signatures in the chain of title, recording errors, unpaid real estate taxes, other recorded liens, defective foreclosures, title search errors, undisclosed easements and title claims by missing heirs and ex-spouses.
The Homeowner’s Title Insurance Policy protects the homeowner’s equity from title risks up to the policy limit. The major risk is forged signatures, such as an ex-husband who forged an ex-wife’s signature on a deed. Other insured risks include improperly executed documents, defective recording, undisclosed restrictive covenants, liens on your title because of a security deed, judgment, tax or special assessment, or a homeowner’s association charge, unmarketable title and mechanic’s liens.
The Homeowner's Policy of Title Insurance is a one-time fee which will protect the equity in your home up to the policy limit for as long as you own the property. You are protected from the same risks as the lender. And if you purchase the property for cash, and/or from a relative or friend, you may need a Homeowners Policy to protect you from unknown real estate tax liens, judgments or IRS liens. If you are purchasing a new home, you may need protection in case the developer's title was defective, or the contractor didn't pay all of the subcontractors or businesses who provided materials for the construction of the house.