What distinguishes owner's title insurance from lender's title insurance?

The distinction between owner's title insurance and lender's title insurance primarily lies in who each type of policy is designed to protect. Owner's title insurance is specifically intended to protect homeowners against potential issues that may arise with the title of their property, such as undisclosed liens, ownership disputes, or title defects that could impact their ownership rights. This insurance remains in effect for as long as the homeowner or their heirs own the property.

On the other hand, lender's title insurance is aimed at protecting the mortgage lender's financial interest in the property. It ensures that the lender's investment is secured in case a problem with the title arises that could affect their ability to collect on the mortgage loan. This coverage typically lasts only as long as the loan is outstanding.

Understanding this fundamental difference helps to clarify the specific risks each policy covers and shows why the correct answer reflects this key aspect of title insurance. The remaining options incorrectly characterize the scope, cost, or legal requirements related to these types of insurance.