What is title insurance?
By definition, title insurance is “A policy issued by a title company after searching the title and which insures against loss resulting from defects of title to a specifically described parcel of real property or from the enforcement of liens existing against it at the time the policy is issued”. In layman’s terms, imagine a basket of sticks. This basket of sticks is the property you are about to purchase. When you have a lien on the property, someone has taken a stick from that basket. When you have a homeowners association, someone else has another stick. When you have construction being done, yet another person has a stick. The job of a title insurance company is to find out who has all of the sticks from this basket and insure that there are no more sticks mysteriously hiding from that will appear years later when you own the property.
Why do you need title insurance?
To protect your most important investment - your property!
What does title insurance protect against?
Here are a few dangers that can cause an encumbrance or a hurdle on title:
• Mistakes in recording legal documents
• Forged or misinterpreted deeds, releases or wills
• Untrue impersonation of the real owner of the property
• Missing spouses, deeds by minors, deeds by persons of unsound mind, deeds by persons allegedly single but legally married
What is a title search?
The title search determines from public records who has rights to the property. It validates that the person selling the home is free and clear of any other person or company holding rights to the property they are trying to sell to the buyer, and that the buyer is getting sole rights to the property.
What is a Chain of Title?
By definition, it is “The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent”. In other words, it’s an entire history of the ownership of the property.
What is a Commitment?
This is a report that states whether or not there are any other claims to the ownership of the property. It writes out the quality of the property, which will give the lender security for a new mortgage loan or allow issues that need to be addressed to come to light.
How much does title insurance cost?
Title insurance and deed stamps must be the same cost from title insurance company to title insurance company. There are fees that may differ from company to company, however, such as search and exam, administration, courier and closing fees. All Florida Title is known for having extremely reasonable fees, much lower than that of our other title company friends, and we also have no hidden fees or upcharges. We encourage you to always ask about hidden fees or upcharges when shopping for title insurance.
Why does the seller need to provide title insurance?
Because the seller needs to guarantee that the investment the buyer is about to make is a solid and clear one. They are in a position to need to provide evidence that the property is clear of all title defects. This is also why the seller has the right to choose the title insurance company - they need to make sure they are working with partners that will without a doubt provide a clean title - or a title with no encumbrances.
Why does the buyer need title insurance?
Without a title insurance policy, there is no protection for the buyer. Any hidden problems |not disclosed by public records or a mistake in tile examination might hold the buyer accountable for any prior issues relating to the property. The title insurance policy insures that you are free of being held responsible for those claims that may arise.
If I am refinancing my home, why do I need new title insurance?
From a lender’s position, they still need to be
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protected even if there is no transition of ownership. They still need to be validated in that the property is still free and clear of all encumbrances. Although the property is not exactly switching hands, there still could have been a cloud on the title while in your construction work. Also, lenders demand title insurance because in the secondary mortgage market, your mortgage needs to hold its value to investors who are interested in buying your mortgage from your current mortgage company.
What is an Escrow and why do I need it?
An escrow is the position an impartial third party plays in your real estate transaction. They manage legal documents and more importantly, the money for the buyer and seller. When you put a deposit down on a new home contract, the money goes into an escrow account for the convenience and care of all parties. It is primarily beneficial because the work that needs to be done for the close, such as termite inspections, payoffs, and appraisals, can be completed on both the buyer and seller side simultaneously using the escrow as the common depositing point. This is also the account that the lender deposits your borrowed funds into, and the escrow company is fully responsible for disbursing as specifically as
the lender, borrower and seller have agreed to.
|What can make a Title Defective? |
Any number of problems that remain undisclosed after even the most meticulous search of public records can make a title defective. These hidden "defects" are dangerous indeed because you may not learn of them for many months or years. Yet they could force you to spend substantial sums on a legal defense, and still result in the loss of your property. 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 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, as practices vary by state):
|• ||Buyer's copy of purchase agreement |
|• ||Cashier's check(s) to make all payments |
|• ||Proof of purchase of insurance for fire, casualty, etc. |
|• ||Invoices for any unpaid taxes, utilities or assessments |
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Photo identification (passport, driver's license, or state-issued identification card)
|• ||Seller's copy of purchase agreement |
|• ||Invoices for any unpaid taxes, utilities, assessments, and latest utilities meter readings |
|• ||Receipts for last payment of interest on mortgages |
|• ||Bill of Sale of personal property covered by the purchase agreement |
|• ||Any unrecorded instruments that affect the title |
|• ||Proof of satisfaction of any mechanics' liens, chattel mortgages, judgments, or mortgages that were paid prior to the closing |
|• ||Photo identification (passport, driver's license, or state-issued identification card) |