Legal Definitions - owner's policy

An owner's policy is a type of title insurance policy that covers the owner's title to a property as well as the mortgagee's interest. This means that if there are any issues with the title, such as liens or other claims, the owner is protected from financial loss.

For example, if John buys a house and obtains a mortgage from a bank, the bank will require a mortgagee policy to protect their interest in the property. However, John may also choose to purchase an owner's policy to protect his own interest in the property. If it is later discovered that there is a lien on the property that was not disclosed during the sale, both the bank and John would be protected by their respective policies.

Another example would be if Sarah inherits a piece of land from her grandmother. She decides to build a house on the land and takes out a mortgage to finance the construction. In this case, Sarah would need both a mortgagee policy to protect the bank's interest in the property and an owner's policy to protect her own interest as the owner of the land and the house.