Q: What are the differences between a "lender's" and an "owner's" title insurance policy? If I buy a house, should I purchase the owner's policy?
Mike Bennett, Baltimore
A: As their respective names suggest, the lender's title policy protects the lender against any title defects or claims against the property -- up to the promised amount of the mortgage.
The owner's title policy insures the property's owner against any title claims or defects up to the full purchase price of the property -- this amount is adjusted for inflation over time.
The lender's policy or coverage does not protect the owner. In fact, the coverage ends when the loan on the property is paid off.
One extra feature of an owner's title policy is that in addition to the protection it provides against any losses sustained due to title defects, it also covers the legal costs needed to fight any title claims.
TTC These costs alone often run to thousands of dollars even if the title defect claimed eventually proves to be groundless.
Because an owner's title policy usually involves a one-time fee of $200 or $300 and the coverage it affords a buyer never ends even after he has sold the property, I always recommend that my clients purchase an "owner's" title policy to protect themselves and give them peace of mind.
Claims against title could come about, for example, if a man at one time sold the property without the wife's consent, or a relative may have had a right of first refusal to buy a property that was sold to another person.
Q: Are home warranties available to someone trying to do a "For Sale by Homeowner" transaction himself? If so, could you give some company names and phone numbers?
Mike Bruno, Parkville
A: Home warranties are available to all homeowners, even if the buyer and seller do not use real estate agents. Warranty contracts typically cost between $350 and $695.
Two national companies that do business in Maryland are HMS (Homeowners Marketing Services) 1-800-327-9787, and AHS (American Home Shield) 1-800-735-4663.