Quick Answer
No lender requires a lender's title insurance policy for a cash purchase, but cash buyers should consider obtaining an owner's title insurance policy to protect their investment. Without it, the investor retains the risk of covered title defects that were not discovered during the title search.
When an investor buys a property with cash, there is no lender requiring a lender's title insurance policy. This can create the impression that title insurance is unnecessary. However, the decision is not that simple.
Cash Does Not Prevent Title Problems
Paying cash does not eliminate the risk of title defects. An unknown heir, a forged deed in the chain of title, an unreleased mortgage, or a judgment against a prior owner can cloud the title regardless of how the purchase is financed. These risks exist in the property's history, not in the buyer's financing method. For more on the types of title problems that can affect investors, read five title problems that can destroy an investor's profit.
Think Like an Investor
If you are wiring $250,000 cash for a property, consider the risk of losing that entire amount if a title defect arises after closing. Without an owner's policy, you would need to hire an attorney, defend your ownership, and bear any financial loss personally. The cost of an owner's policy is a single premium paid at closing, while the risk it covers could be your entire investment.
For a full discussion of what owner's title insurance covers, see what an owner's title insurance policy covers.
This article provides general educational information and does not constitute legal advice or a recommendation to purchase or decline title insurance. Consult qualified professionals for advice specific to your transaction.