I need Title Insurance?
Selling and Purchasing Real Estate is one of the most important and often the largest transaction people are involved in. The national average for people selling their homes is 11 years. I thought discussing the role title insurance plays in a real estate transaction would be helpful to those of you considering purchasing or selling property in the near future.
When you purchase a piece of property you receive a deed and title to the property. The deed is a written document signed and witnessed by two people by which one or more people conveys title of land to another. The title is the bundles of rights in the property.
How do you know you
are getting a free and clear title?
In Florida residential real estate transactions, title companies or attorneys usually handle closings. An attorney’s opinion of title is limited to recorded matters and if there is a claim, the attorney must be found negligent and the claim paid by that attorney. Title companies handle the details of the property closing, performing the title search, preparing the deed, title, closing statement, any necessary papers, recording of documents, and issue a title insurance policy at closing.
What is Title Insurance?
Title insurance protects you and your heirs (as long as they hold title to the property) against claims and pays for any loss to the insured as well as the costs and legal expenses involved in defending the title claim.
What does title insurance protect against?
Forgery, fraud, false affidavits, undisclosed or missing heirs, unrecorded contracts of sale, bankruptcies in other jurisdictions, after-born or adopted children, suppressed or undiscovered wills or codicils, power of attorney revoked by death or insanity, claims arising by reason of foreign divorces, erroneous interpretations of statues and rules of law, unrecorded easements, false impersonations, insanity and incompetence, infancy, and perjury.
Title insurance claims are rare compared to other types of insurance. Common claims are for the cost of property back taxes that the title company missed, or the cost of a settlement for encroachments like a fence across the property line.
What is a title search and how is it done?
A title search is an examination of public records, laws and court decisions to disclose the current facts regarding ownership of real estate. A title search is conducted at a title plant, a facility where title records are kept, or at the county clerk’s office, examining all recorded documents creating a chain of title (series of transactions and documents affecting the title to a particular parcel of land).
The search will reveal encumbrances, deficiencies, or imperfections in the chain of title, which are of public records such as liens, mortgages, tax liens, special assessments, clerical errors, death, bankruptcy, death, or divorce. These deficiencies or imperfections create a "cloud on the title". The title company will assist in clearing the clouds, whenever possible. Before a title insurance policy is written, the title must be "clean".
How much does title insurance cost – who pays for it?
In Florida, title insurance is regulated by Florida Department of Insurance; title fees are promulgated, that is minimum fees are established by the Florida Department of Insurance. The title companies and attorneys may also charge fees for items such as settlement, search, or title examinations.
The cost of title insurance is a one-time charge compared to other types of insurance with annual premiums. Take a home selling for $100,000 - the cost of the owner’s title policy and fees would be approximately $900 to $1000. Traditionally the seller pays for the owner’s policy; the cost, however, is a negotiable item. If the purchase involves a mortgage, the lender will require the purchaser to provide title insurance equal to the amount of the mortgage. The purchaser can "piggyback" off the seller’s title policy, with the title company issuing both simultaneously, saving the purchaser hundreds of dollars.
Title insurance is only one part of a real estate transaction. Please consult with your REALTOR before making any decisions. If you'd like a list of title companies and real estate attorneys or have other real estate questions please contact me.
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