Leasehold Insurance

Product

Description

Leasehold Insurance

Leasehold insurance is Owner’s title insurance limited to a lease interest in the property rather than a straight ownership right. It is for owners of a home or mobile home who rent the land underneath the residence. The Leasehold policy is usually issued in the amount of the aggregate purchase price of the home and the lease at the time of closing. It is purchased for a one-time fee at closing and lasts as long as you or your heirs have a lease interest in the property.

In order to issue title insurance, the title company must search public land records for matters affecting that title. Many search the "chain" of title back 50 years. Twenty-five percent of title searches find a title problem that is fixed before the insurance is issued. Some examples of items that can cause a problem are: deeds, wills and trust that contain improper information; outstanding judgments or tax liens against the property; and easements. Title companies fix the problems then issue the title insurance.

Occasionally, in spite of an exhaustive title search, hidden hazards can emerge after closing. Things such as mistakes in the public record, previously undisclosed heirs claming to own the property; or forged deeds could cloud the title. Leasehold insurance offers financial protection against these by negotiating with third parties, and paying claims and the legal fees involved in defending the title.