TITLE INSURANCE

Title is the ownership basis of real estate. It represents your legal rights in the property’s use, control, possession, and dispossession. It includes a bundle of rights that represents your legal interest in the property.

Not all title defects are part of public record. Such “hidden” defects may not be found in the course of a title search, no matter how thorough the examination. This is where title insurance comes in. Title insurance protects you against problems with the title you didn’t know about when you bought the home. Some of the problems that can arise include forged wills or deeds, title transferred by a minor, a married person conveying real estate without their spouse, fraudulent impersonations, undisclosed heirs, invalid divorces, and false affidavits. If a problem is discovered, your title insurance pays the costs to defend your ownership in court, to fix the problem or covers your financial loss if the defects cannot be fixed.

Generally, there are two types of title insurance policies: an “Owner’s Policy” and a “Lender’s Policy.” An Owner’s Policy is usually issued in the amount of the total purchase price of the property. It is purchased for a one-time fee at closing and lasts for as long as you have an interest in the property. Only an Owner’s Policy protects the buyer should a covered title problem arise.

A Lender’s policy protects the lender up to the amount of the loan. If you are receiving a loan in connection with your purchase, your lender will require that they receive a lender’s policy of title insurance, which is generally paid by the buyer. Because lenders are sophisticated real estate investors, they understand the issues and problems that can affect title to any given property. That is why every lender requires a loan policy that protects their interest in the property.

Title insurance rates are promulgated by the state of Florida and are approximately 1/2% – 1% one percent of the purchase price of the property. The cost of the policy includes an exhaustive title search, review, and additional associated services. In contrast to other types of insurance premiums that are paid on a yearly basis, title insurance premiums are a one-time payment, generally at settlement.

There are several advantages of hiring an attorney to act as the title and closing agent when buying or selling a property:

• First, title companies do not represent the buyer or seller; they merely act as a neutral third-party. On the other hand, an attorney will represent you and look out for your best interests throughout the transaction, while also overseeing the entire transaction.
• Second, title companies cannot provide legal advice when questions arise whereas attorneys can answer any legal questions you may have. Realtors also benefit working with an attorney because they can review the contract and advocate for their client during the negotiation process.
• Third, title companies cannot create contract amendments, corrective documents, or any other legal documents that may be necessary to close on the property. When a problem arises, not having an attorney can delay the closing.
• Lastly, the cost of a title company is generally comparable in price to hiring an attorney. Many of the closing costs are set by the State of Florida, so they are the same whether it’s an attorney or a title company acting as a closing agent. In fact, an attorney can sometimes save the parties money because they can perform several of the duties a title agent cannot do.