When you buy a new home, Virginia law does not require you to purchase an owner’s title insurance policy, but your mortgage lender most likely will require you to purchase a lender’s title insurance policy before it will give you your mortgage. As the Virginia Title Center explains, the difference between these two types of title insurance is who they protect. As their names imply, an owner’s policy protects you and your equity in your home; a lender’s policy protects your lender and its lien rights to your home.
Naturally you need to own your home yourself, and you do not want anyone to later claim that they own it instead of you. In other words, you need clear title to your home. Since others probably owned the property before you, however, the title insurance company conducts a title search to make sure that all previous owners properly and legally conveyed it to its subsequent owners down through the years. Nevertheless, even the best title search sometimes fails to catch an error such as one or more of the following title defects:
- A survey company incorrectly surveyed the land, resulting in incorrect boundaries.
- Someone failed to give the correct legal description of the property.
- An underage owner conveyed the property.
- An owner conveyed the property as a single person when (s)he was actually married.
- The Probate Court failed to discover all of a deceased owner’s heirs.
- Someone in the Recorder of Deeds Office made a clerical error when recording a previous deed to the property.
Your owner’s title insurance policy protects you against having to personally pay the expenses involved in defending your title in court and losing the equity in your home should your defense prove insufficient. As such, it represents one of the smartest buying decisions you will ever make.
This is general educational information and not intended to provide legal advice.