The following may be able to provide some basic answers to some frequently asked questions about title insurance. This information is addressed to both the buyer and the seller.
What is meant by "Title”?
"Title" is the foundation of ownership property. It means that you have a legal right to possess that property and to use it within the restrictions imposed by authorities or limitations on its use-superimposed on the basic right to possession by previous owners.
What is Title Insurance?
The legal answer is "the application of insurance principles to hazards inherent in real estate titles."
Do I need Title Insurance?
Most definitely! Title insurance is a means of protecting yourself from financial loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects that even the most careful title search will not reveal. In addition to protection from financial loss, title insurance pays the cost of defending against any covered claim.
Why does buying a home differ from all other purchases?
No other property has a useful life that compares with that of land. Owners die, new ones succeed, but land goes on forever. Owners of goods may change their locations at will, but land is immovable, it lends itself to the absorption of innumerable rights. Over the ages, this so impressed lawyers and jurists that they formed a separate body of laws for land. These laws, creating many types of rights in land, are so numerous and so complex it is impossible for there to be a mathematical certainty of ownership.
But the lender already requires Title Insurance, won't that protect me?
Not necessarily. There are two types of Title Insurance. Your lender likely will require that you purchase a Lender's Policy. This policy only insures that the financial institution has a valid, enforceable lien on the property. Most lenders require this type of insurance, and typically require the borrower to pay for it.
An Owner's Policy on the other hand is designed to protect you from title defects that existed prior to the issue date of your policy. Title troubles, such as improper estate proceedings or pending legal action, could put your equity at serious risk. If a valid claim is filed, in addition to financial loss up to the face amount of the policy, your owner's title policy covers the full cost of any legal defense of your title.
What is meant by a title defect?
Anything in the entire ownership of a piece of real estate which may encumber the owner's right to the "peaceful enjoyment" of the property or which may cause the owner to lose any portion of the property.
The contract I signed makes the sale subject to title to the properties being good. Doesn't that protect me?
If anything should happen to defeat the title, your cause of action would be against the seller, and his ability to pay. Attorney's fees and expenses would not be covered.
The real estate broker said the title is good. Isn't that good enough?
No one can be sure the title is clean.
What happens if my home is protected by title insurance and it's challenged?
You notify the title insurance company and they defend the title, even if it goes to court. The title company bears all expenses.
How much does Title Insurance cost?
The one-time premium is directly related to the value of your home. Typically, it is less expensive than your annual auto insurance. It is a one-time only expense, paid when you purchase your home. Yet it continues to provide complete coverage for as long as you, or your heirs, own the property.
Should I shop around for the best Title Insurance deal?
Florida regulates the rates on the premiums for title insurance. The only costs that may differ would be the actual fees, such as search and examination, closing, and miscellaneous fees such as wire transfers, FedEx or courier fee and endorsements.
Can we handle the closing?
Yes. We act as a central clearinghouse for the parties involved—collecting necessary documents, insuring adherence to the lender's title instructions, making arrangements for proper payment and distribution of funds. We are fully prepared to work with you from the beginning of your transaction all the way through to conclusion.
Who pays for which expenses at closing?
Closing costs are customarily, but not always, divided between the buyer and seller, as follows:
- Recording Fees
- State Documentary Stamp Tax on Mortgages
- Intangible Tax on Promissory Notes
- Termite Inspection; Surveys; Appraisals; Home Inspections, etc.
- Lender's Title Insurance Policy
- Endorsements to Lender's Policy
- Courier Fees
- Express Mail & Shipping
- State Documentary Stamp Tax for Deed of Conveyance
- Assessment Search
- Owner's Title Insurance Policy
- Title Search, Exam and Closing Fee
- Courier Fees
- Express Mail & Shipping
What items are needed at closing?
You will want to have these items complete or in hand when you come to the closing (please confirm with your escrow officer prior to closing):
- Buyer's copy of purchase agreement
- Cashier's check for amount needed to close
- Proof of purchase of insurance for fire, casualty, etc.
- Photo identification (passport, driver's license, or state-issued identification card)