Lenders Title Policy

6 Replies

Question for the private money lenders.  Do you typically take out a lenders title policy when you lend?  If so, I could use a reference to a title company or two that offers lenders policies at reasonable rates.

We will not make a loan without a lenders title policy.

I dont know about your state, but in Texas the price is set by the state so it does not matter what company you use.

I make the borrower get a lenders title policy and also make sure I am the beneficiary on the homeowners insurance.

Thanks guys.  I appreciate the insight.

I am in a similar situation.

I am borrowing money from a relative's IRA to rehab a SFH.

Do I need to get her a lender's policy?

Is it absolutely necessary?

@David Mitro

 I would say not absolutely necessary in this case.  An owner's policy insures title to owner.  A lender policy insures, basically, ability to foreclose and retain that priority.  Basically, did the title company screw up and miss a senior lien that would remain if the insured lender foreclosed.  That is what lender policy is insuring against.  

If you are close to relative (in terms of trust) then there should be no question of foreclosure priority.  If you do not repay, deal is presumably you make whole somehow (eg, voluntary transfer of title, etc).  If there is a title defect, the owners policy should in effect cover both of you in this circumstance.  On other hand, if relative says s/he wants same assurances/security a 3rd party lender would have, then a title policy would be appropriate.

Thanks, @Leonard L.

So it sounds like if the private lender is close enough to you, it is not necessary.

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