Buying SFR FSBO. Below is text from a form from the title company (large, national) that states I will pay title insurance for lender coverage, but title insurance for owner is an option, and not necessarily the same as the lender insurance. I must sign this, and also indicate if I want title insurance, which I understand from other posts here that I absolutely should buy.
Regarding the optional owner title insurance, my questions are:
Per item 4 below, why is the coverage offered to the owner possibly not the same as that provided to the lender? Do owners not have the same need to protect against the same risks as lenders?
They don't seem to be offering me options, just buy what they offer, or not. Is this controlled by law, that is, could I end up paying for coverage that may not cover, or is it just different because of the difference in positions of lender and owner?
Any comments will be appreciated.
NOTICE TO PURCHASER OF RIGHT TO OBTAIN
OWNER'S TITLE INSURANCE POLICY
In connection with the settlement of a real estate transaction involving a Purchase Money Mortgage or Deed of Trust on property located in MD, NOTICE is hereby given in compliance with Md. Code Ann. Ins. § 22-102 (a) (2).
1. That a Mortgage Title Insurance policy will be issued by Chicago Title Insurance Company insuring the Lender in the amount as set forth on the Purchase Money Mortgage or Deed of Trust in a premium amount as set forth on your Settlement Statement.
2. That this policy will provide protection only to the Lender and does not protect you as property owner.
3. That your name has been placed on a Commitment for Title Insurance furnished to you and you are hereby given the right to obtain a SIMULTANEOUS Owner's Title Insurance Policy for an additional premium, if you request it at this time.
4. That the Owner's title Insurance policy will be subject only to the contingencies and conditions contained in the Commitment and the Conditions and Stipulations that will appear in the Owner's Policy.
5. You have a right to review a sample form of the policy in which said contingencies, Conditions and Stipulations will be inserted.
6. The Owner's Policy will be effective upon payment of the premium, subject to the satisfaction of the requirements and contingencies as set forth in the commitment.
ACKNOWLEDGEMENT OF NOTICE, etc, etc...
SOP. The lender requires title insurance to protect Them from title issues. If You want title insurance to protect You, you have to buy it also.
Thanks for your reply.
I guess my concern is that without a licensed real estate agent acting on my behalf as buyer, I'm wondering about the owner's title insurance coverage I am being offered--is it standardized by law throughout the industry, or should I hire a lawyer to determine if it is suitable for my needs, or just sign on the line and go with the flow? It might take me a week to work my way through the policy, looking things up as I go, and I still would likely not understand what it all means for me if there is some sort of a claim against the title in the future.
Bottom line, am I being offered the same title insurance, as a buyer of a FSBO, as I would be if I were represented by a licensed RE agent?
@Mike C. Yes, having an agent, or attorney, makes no difference. The title policy is an industry standard, is what it is, it won’t be modified.
The only possible variable, is whether they search for “unrecorded” liens (code violations not recorded yet, etc) If that is applicable in your area. Here it cost an extra $200 or so for the title co. to actually send inquiries to the various city/county dept.s.
You may want an attorney to review the title commitment if there are exceptions that you do not understand.