Owner title policy vs mortgagee title policy

An owner's title insurance policy protects the property buyer and insures to the buyer that he is getting good title to the property free and clear of any liens. The owner's policy is typically paid for by the property seller. A mortgagee policy protects the buyer's mortgage company and insures the mortgage company that it has a good valid first mortgage lien against the property. It is typically paid for the the property buyer.

Attorney Tom Olsen: Dave, go ahead.

Dave: I got a question. If you're buying or selling a house, say for example if you're selling a house, and there's a buyer's title policy because if he's financing, the bank is going to require him to prove that where he’d get the money from if he doesn't have a link. Why is it that the seller also has to get the exact same title search done? I think that they're basically the same thing, usually done by the same company. Why is it they both have to do it?

Attorney Tom Olsen: Dave, there's only one title search, but there are two title policies. There is an owner’s policy where you as a seller are going to ensure that the buyer has good title to that piece of property. There's a mortgagee policy that the buyer will pay for where he is ensuring that the lender has a good valid mortgage lien against the property. There are no laws that say that the seller has to pay for the owner’s policy and the buyer has to pay for the mortgagee policy. That is customary, Dave. I hope that answers your question for you. Go ahead.

Dave: If the buyer is buying one and the owner is getting one, essentially the title company is charging twice for the same search and just putting a different title on the page?

Attorney Tom Olsen: There is only one search fee, but there are two different fees for title policies. One is for an owner’s policy, one is for a mortgagee policy, Dave. I think, again, only one search, Dave.