Title Insurance protects consumers from financial loss and hardship related to unknown judgments and liens, forged transfers, inconsistencies within a property’s title or misapplication of fiduciary funds.
As a soon to be home owner, you may be wondering whether title insurance is worth the cost or not.
You need to know the importance of title insurance and how it can protect you from hidden issues that are associated with buying a new home.
What is Title Insurance?
Title insurance offers protection against any claim that comes against the ownership of a property.
A “title” is composed of three basic elements.
- Rights and interests that are disclosed in the public records or by physical inspection of the property, i.e., deeds, mortgages, leases, etc., parties in possession, utility easements, etc.
- Rights and interests that are not recorded but exist, i.e., limitations imposed by laws and statutes, etc.
- Rights and interests that are hidden, i.e., forgeries, secret marriages and unknown heirs.
There are two types of title insurance policies are available during the closing process. There is a lender’s policy, and a homebuyer’s policy.
The Lender’s Policy
The overwhelming majority of mortgage loans made in the United States are made by persons who are acting in a fiduciary capacity – by savings and loan associations, savings banks, and commercial banks on behalf of their depositors, and by life insurance companies on behalf of their policyholders. Because they are lending other people’s money (other people’s savings or policyholder’s funds) these lenders must be concerned with the safety of their mortgage investments.
A policy of title insurance provides a mortgage lender with a high degree of safety against the loss of security as a result of a title problem. This protection remains in effect for as long as the mortgage remains unsatisfied.
The Homebuyer’s Policy
The purchaser of real estate needs protection against serious financial loss due to a defect in the title to the property purchased. For a single, one-time premium, which is a modest amount in relationship to the value of the property, a buyer can receive the protection of a title insurance policy – a policy that is backed by the reserves and solvency of the Company. A title insurance policy will cover both claims arising out of title problems that could have been discovered in the public records, and those so-called “non-record” defects that could not be discovered in the record, even with the most complete search.
A title insurance policy will not only protect the insured owner, but also that person’s heirs for as long as they hold title to the property, and even after they sell by warranty deed. The Company will not only satisfy any valid claim made against the insured’s title, but it will pay for the costs and legal expenses of defending against a title claim.
What Does Title Insurance Protect You From?
Title insurance protects you from hidden hazards and claims that may be made after you’ve completed the purchase of your new home. At Nona Title, we do a title search and a municipal lien search PRIOR to closing so that we can fix any hidden hazards. This will help you know if the seller has a “clear title” without legal claims or issues after the fact. We call this a “Green Light Listing”.
Having a clear title means that any levies or liens from a financial institution or creditor, liens from unpaid taxes, or claims from relatives who feel they were cheated when the property was sold by a previous owner are addresses and fixed prior to closing.
the Green Light Listing process and title searches will reveal any title issues and help you avoid them during closing.
Is Title Insurance Worth It?
Title Insurance is worth it because there could be several hidden issues regarding title ownership many years after the home purchase, such as:
- An oversight during title research
- An unknown heir
- An error in ownership history
- A pending legal judgment or lawsuit
- A fraud committed by a previous title holder
It is imperative that you protect yourself with a homeowner’s title insurance policy. If a title defect occurs after a loan closing, you may have to deal with legal costs to fix these hidden hazards. This could also lead to a potential loss of your property and all the money you’ve invested in it.
If There is a Warranty Deed on the Property, Do I Need Title Insurance?
When seller has issued a warranty deed offering a clean title, this means that the seller has transferred their risk to the insurer and the lender’s title policy will protect them. What will happen to you? Without a good title policy, you could lose your stake in the home, including:
- Your down payment
- The cost and value of any major home renovations/improvements
- The equity that has started building up
A title claim can arise years down the line, it is in your best interest to play it safe and protect your investment.
What Are the Title Insurance Regulations for Florida?
In Florida, most of the costs associated with title insurance are covered by the seller, including the cost of the title search and the cost of the lender’s title insurance.
The amount of money you’ll need for owner’s title insurance will depend on the price of the home you’re buying. The amount of money you pay for your one-time premium is determined by the regulations of the state of Florida.
Enjoy a Professional and Stress Free Closing Experience
Title insurance is worth the extra cost for anyone who wants to ensure they don’t lose their investment. Our Green Light Listing process ensures that the title is clear prior to closing.