Who has an insurable interest in the property during a real estate transaction?

In the context of a real estate transaction, the lender involved in the transaction has an insurable interest in the property. This is primarily because the lender often provides financing to the buyer, which means they have a financial stake in the property until the mortgage is paid off in full. The lender's interest is protected through title insurance, which helps safeguard against risks such as title defects or claims that could undermine their right to the property. If a problem were to arise, the title insurance would cover the lender's financial investment, making their insurable interest critical in any real estate transaction.

While the seller has a vested interest in selling the property, their insurable interest diminishes once the transaction is complete, as they no longer hold ownership or financial stake. The agent representing the buyer acts on behalf of the buyer but does not have an ownership interest in the property itself, and thus does not hold an insurable interest. Lastly, the state government may regulate property transactions and collect taxes but does not fundamentally possess an insurable interest in individual real estate deals unless it has some specific claim or lien on the property.