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  • Cesar Tamayo

Why does your lender need a title policy?

I was recently asked by a new borrower: "Why do you need a lender’s title policy?"

This question was coming from a place of learning and I was happy to answer it.

By the way, if you need funds for your next project, I would love to help. Feel free to visit or give me a call at 484-706-9601

Title insurance policies provide the lender and buyer legal and financial protection against ownership issues from the past.

As a private lender providing funds to a borrower who is purchasing a property, I always require the borrower to obtain a Lender's Title Policy, which is sometimes also called a loan policy.

Generally, a Lender’s Title Policy covers the lender and its interest in its collateral. It loses value as the mortgage is paid and expires when the mortgage is paid off.

This policy protects the Lender’s investment in the property in the case of a title defect.

Most lender title insurance policies are standard and usually cover the following common defects:

  • Contractor claims

  • Tax liens

  • Debt claims against the property

  • Unknown co-owners or heirs

Coming from a private lender’s perspective: I LOVE when a borrower includes this as part of their title order. Whether you’re working with an experienced or inexperienced private lender, I recommend you include them on your communications with your title company as soon as possible. When you order title (or soon thereafter), loop in your lender in the communication with your title company. Introduce him/her as your lender and let them know that you will need a lender’s policy and he/she will provide the appropriate information needed.

Hope this was helpful for you. If you're looking for a loan on your next deal, please feel free to reach out to me at 484-706-9601 or apply online at

Not ready to apply for a loan? We're always happy to connect with people to see how we can help in the future!

By the way, feel free to share this post with others who you think may find this helpful

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