A title insurance policy covers or protects the owner of the policy against claims involving ownership of the property, liens against the property and marketability of the property. There are two types of policies: lender’s, or mortgagee, and owner’s. All lenders require title insurance for the amount of the loan to protect them against the above claims. In Georgia, unlike some states, a seller is not required to provide an owner’s title policy to the purchaser.
A lender’s title policy is written in the lender’s name and protects only the lender. If there is a successful claim against the title, even up to a total failure of title, the lender will be fully reimbursed by the title company. The buyer is still liable for the payment of the loan, and of course buyer’s equity is not insured. An owner’s policy of title insurance offers complete protection for the buyer against claim or loss, including attorney’s fees and court costs.
As with any insurance policy, it is very important to understand the exclusions, or what the policy does not cover. An owner’s policy insures against claim or loss arising from something that happened or did not happen prior to the recording of the deed that is insured (for an owner’s title policy, the recording of the warranty deed into the buyer). An owner’s policy does not cover anything existing against the buyer when he or she takes title, such as federal tax liens or other judgments, nor does it protect against anything that may attach to the property through the buyer after the buyer takes title. The policy des not protect against the reassessment of current or past property taxes. If the buyer did not have a survey prepared for the purchase or the property, the owner’s policy will specifically exclude coverage for any condition that such a survey would have disclosed. An owner’s policy also will not protect against non-title matters such as zoning or local government regulations.
Title insurance is written by the closing attorney as an agent for the title insurance company. Title insurance premium rates, although not regulated by the state, tend to be uniform because of market competition. The best time to purchase owner’s title insurance is at the closing because the title, tax and lien search has already been done. GRECAA recommends that all buyers purchase both owner’s title insurance and a survey in connection with the purchase of a house.
