Question 1

What is a lender’s title insurance policy?

Accepted Answer

A lender’s title insurance policy (also called a loan policy or mortgagee’s policy) protects the lender’s interest in the property against title defects. The policy insures the validity and priority of the lender’s mortgage lien. If a title defect is discovered that affects the lender’s mortgage position (such as a prior lien, an ownership dispute, or a forgery in the chain of title), the title insurance company will: defend the lender against claims, pay losses up to the policy amount, and take steps to correct the defect. A lender’s policy is typically required for all mortgage transactions; the borrower usually pays the premium. The policy coverage decreases as the loan is paid down and terminates when the loan is paid off.

Question 2

How does a lender’s policy differ from an owner’s policy in Florida?

Accepted Answer

Key differences: the lender’s policy protects the lender; the owner’s policy protects the buyer/owner. The lender’s policy coverage decreases as the loan is paid down; the owner’s policy coverage remains constant (and may increase with inflation endorsements). The lender’s policy terminates when the loan is paid off or refinanced; the owner’s policy lasts as long as the insured (or their heirs) own the property. The lender’s policy premium is typically paid by the borrower in Florida; the owner’s policy premium is typically paid by the seller (except in Miami-Dade, Broward, Sarasota, and Collier counties, where the buyer traditionally pays). Both policies are issued at closing and are based on the same title search.

Question 3

What does a lender’s policy cover in Florida?

Accepted Answer

Coverage: the validity of the mortgage lien (the lender’s mortgage is valid and enforceable), the priority of the mortgage lien (the mortgage has the priority position shown in the policy), title defects (forgery, fraud, undisclosed heirs, recording errors), liens and encumbrances not shown in the policy (undisclosed tax liens, mechanics liens, judgment liens), and access issues (if the property does not have legal access, the policy may cover the loss). Standard exceptions (items NOT covered unless removed): defects the borrower created, rights of parties in possession (tenants), survey matters (boundary disputes, encroachments), and unrecorded liens and claims. Enhanced coverage (available with additional endorsements) may cover: survey issues, zoning violations, and gap coverage.

Lender’s Policy

Lender’s Title Insurance Policy

What It Covers

vs. Owner’s Policy

Standard Exceptions

Related Terms

Barnes Walker Title

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