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              Introduction to Title Insurance

Types of Title Insurance

There are four types of title insurance policies which are
available: the owner’s title insurance policy, the mortgagee title
insurance policy, the leasehold owner’s title insurance policy,
and the leasehold mortgagee title insurance policy.  The owner’
s title insurance policy and the mortgagee title insurance policy
are the most common types of title insurance policies that are
utilized but the leasehold owner’s insurance policy and the
leasehold mortgagee title insurance policy also serve important
roles.

Owner’s Title Insurance Policy:

An owner’s title insurance policy is issued when the title to real
property is conveyed from one party to another.  It is the party
that is receiving the title to the real property that is insured by
the owner’s title insurance policy.  Such a policy insures the new
owner of the real estate against losses that result from defects
in the title to the real estate which are not disclosed within the
policy as exceptions to the title insurance coverage.

Mortgagee Title Insurance Policy:

A mortgagee title insurance policy or a loan title insurance
policy is issued when a loan is secured by a lien on real
property, such as a mortgage.  The party that is benefited by
the lien of the mortgage, typically a lender, is insured by the
mortgagee title insurance policy.  A mortgagee title insurance
policy insures against losses that result from either defects in
the title to the real property encumbered by the mortgage that
are not disclosed within the policy as exceptions to the title
insurance coverage and it insures against losses that result
from the loss of priority of the insured lien due to the existence
of superior liens which supersede the insured mortgage.

Leasehold Owner’s Title Insurance Policy:

A leasehold owner’s title insurance policy is issued when a
tenant enters into a lease for real property.  It is the tenant that
is insured by the leasehold owner’s title insurance policy.  Such
a policy insures against losses that result from defects in the
title to the real property that is being leased by the tenant that
are not disclosed within the policy as exceptions to the title
insurance coverage and it insures against losses that result
from undisclosed third parties that have superior rights to
occupy and possess the leased property.  Generally it is
tenants with long term leases that will obtain leasehold title
insurance policies particularly before the tenant undertakes
significant construction on or improvement of the leased
property.

Leasehold Mortgagee Title Insurance Policy:

A leasehold loan or leasehold mortgagee’s title insurance policy
is issued when a tenant of real property is securing a loan with a
lien on the leasehold interest in real property.  Such a financing
arrangement is often limited to long term leases which can
justify large expenditures by the tenant for construction and
improvements but such financing can also be utilized for shorter
term leases and with projects with lower construction costs.  The
lender, the party that is benefited by the lien of the leasehold
mortgage, is insured by the leasehold mortgagee title insurance
policy.  A leasehold mortgagee title insurance policy insures
against losses that result from defects in the title to the real
property that is being leased by the tenant that are not
disclosed within the policy as exceptions to the title insurance
coverage, it insures against losses that result from undisclosed
third parties that have superior claims to occupy and possess
the leased property, and it insures against the loss of priority of
the insured lien due to the existence of superior liens which
supersede the insured leasehold mortgage.

                                                         Return to Introduction to Title Insurance
Law Office of
Craig W. Little, P.A.