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What is Title Insurance?
Title insurance is one of the least understood but must important part of the real estate transaction. Without it you are gambling that the sellers (and all of the prior owners) actually have good title and the rights to sell to you the property. The title research shows if the property is clear of liens, judgments, missing deeds and more. Title insurance takes the risk out of buying by providing the financial responsibility of insuring the buyer’s ownership.
Can I purchase title insurance after my closing?
The time to buy title insurance is when you purchase property. If you are financing your home, your lender will require that you purchase a lender’s title insurance policy at closing. It’s much less expensive to purchase the owner’s title policy at the same time and from the same company.
What is a title report?
A title report (sometimes referred to as a preliminary title report) is a report that discloses the current ownership, easements, restrictions and liens relating to a particular property. It is based on a thorough examination of the public records. This report is normally prepared by a title company and is used to issue a title commitment and ultimately a title insurance policy. For the most part, title report is an internal document and the title commitment is the product the buyer and lender receive from the title agent.
What if I am challenged about the ownership of my property?
At the suggestion of an adverse claim to your title, you need to contact me and together we will contact your title agent or title insurer who issued your title insurance policy. Remember, title insurance covers legal expenses necessary to investigate, litigate or settle a claim against your property.
What does the one-time premium for my owner’s title insurance policy do?
For a one-time premium, your owner’s title insurance policy:
- Remains in effect as long as the insured, or the insured’s heirs, retain an interest in the property
- Pays for defending against lawsuits attacking insured title by either clearing up title problems or paying the insured’s losses
- Provides coverage when you have obligations under a warranty in any sale of the property
- An Owner Policy, issued simultaneously with a Lender Policy, is the best title insurance value a property owner can obtain.
What protection does title insurance provide against defects and hidden risks?
Title insurance will pay for defending against any lawsuit attacking the insured title and will either clear up title problems or pay the insured’s losses.
What does title insurance protect against?
A few of the most common hidden risks that can cause loss of title or create an encumbrance on title are…
- False impersonation of the true owner of the property
- Forged deeds, releases or wills
- Undisclosed or missing heirs
- Instruments executed under invalid or expired power of attorney
- Mistakes in recording legal documents
- Misinterpretations of wills
- Deeds by persons of unsound mind
- Deeds by minors
- Deeds by persons supposedly single, but in fact married
- Liens for unpaid estate, inheritance, income or gift taxes
Do I have to renew my title insurance year after year?
Title insurance is a “one-time” premium paid at closing. The policy lasts as long as the buyer (the insured) owns the property. And when the lender is insured at the same time, a substantial discount is offered for the “simultaneous” policy.
If the buyers refinance their home, a reissue discount is offered saving up to 40% of the title premium. We recommend that if you are refinancing your home, make sure you provide us with a copy of your old policy to obtain a reduced price on the lenders title insurance. Hallmark Title Agency will accept a policy from any title company for a reissue rate.
If the lender has title insurance protection and I do not purchase it, what possible danger of loss exists?
Assume you purchase your real estate for $150,000. A down payment of $30,000 is made and a lender holds a $120,000 mortgage. The lender acquires title insurance protecting the lender's interest up to $120,000. But your down payment of $30,000 is not covered. And as you make payments over time, you have a greater risk if there is a claim to title.
How do you file a title insurance claim?
An owner's policy of title insurance protects the legal rights to real property. If there is any question or concern about those legal rights, the homeowner should immediately notify the title insurance company whose name appears on the title policy. If the homeowner is unable to locate their policy, or if they are unsure whether a policy was purchased, contact the title company, title agent or attorney that handled the purchase and inquire about coverage. You can determine if you have title insurance coverage by reviewing the settlement statement (HUD-1 or Closing Disclosure) provided at the closing of your purchase, which itemizes receipts and disbursements by the closing officer.
When giving notice of a potential claim to the title insurer, you should include the property address, a brief statement of the question or matter that concerns you, copies of any claims documents received, and a copy of your owner's policy (if available).
What is meant by the term Marketable Title?
The term "Marketable Title" is used to describe a title that is free from reasonable doubt as to who the owner is. Cures for less than marketable title include quiet title suits or quit claim deeds from those claiming an interest in the property. Title insurance is the ultimate "assurance" of marketable title.
Are there any problems a title search cannot reveal?
Yes. There are some "unforeseen problems" that even the most diligent title search may not reveal. Some hidden exposures include fraud, forgery, defective deeds, mental incompetence, clerical errors in the records, and confusion due to similar or identical names. Or, the previous owner could have incorrectly stated his or her marital status, resulting in a possible claim by a legal spouse. These defects can arise after you've purchased your home and can jeopardize your right to ownership. Title insurance protects you from these unforeseen problems.
How did title insurance start — what’s the history?
The title insurance business has been around for a long time. Attorneys used to review the title documents and search public records, but in the mid-1800s an attorney was concerned that an “attorney’s opinion” wasn’t good enough. An attorney’s opinion is good as long as the attorney is right and no one challenges the opinion. Title insurance is the financial assurance that if there is a financial loss (or threat of a loss) that someone will fight for the owner. Title insurance has only become popular in Florida in the past 40 to 50 years. Prior to that buyers relied solely on attorneys’ opinions.
How can there be a title defect if the title has been searched and a loan policy issued?
Title insurance is issued after a careful examination of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.