Title Insurance Protects Your Investment
The biggest investment you will make in your life will probably be the purchase of a home. Before you close, you'll want to know that no other individual or entity has a right, lien or claim to the property, and protect your rights.
A title company does all the research to insure that a property has clear title. Making sure that a property is clear of all legal encumbrances is the job of a title insurance company.
For a modest, one-time title insurance premium, you will receive continuous title insurance protection equal to the purchase price of the property or its current market value. The law doesn't require you to purchase this, but, the lender requires a title policy from the title company for their protection, and you should too! In Florida's purchase contracts, the seller will pay a portion of the buyer's title insurance if you let them choose the title company or attorney handling the closing. You are paying for the lender's coverage anyway! The realtor wrote the contract so the title company or attorney is protecting everyone's interest, not just the seller.
The title company searches the property's title history. Through its research, the title company can usually identify any title problems and have these problems cleared-up before you close on the property.
Real Estate law is extraordinarily complicated. Title companies make sure that all the T's are crossed and all the I's are dotted so you don't end up with a clouded title and legal problems. Your title insurance owner's policy (if you choose to purchase it) will describe the property and outline any recorded limitations on your ownership. It will also cover the responsibilities of the title company.
Title insurance covers the following:
- Contested title — Someone, usually a previous owner or occupant, claims they still own the property or have not given up their claim. In this case, the title company will defend your title and will cost you nothing as long as you purchase the title policy. The lender's policy does not cover you, only their interest.
- Defective title — This is a general term for a legal problem with the title that cannot be corrected and includes "contested title" above. Other examples of title defects include problems with legal access to the property, easements that make the property less usable, unusable, or non-saleable properties. Many other complex problems define "Defective title" or "Clouded Title." The title company will uncover these problems. If they miss them, the will insure your loss up to the amount of the policy. They also cover errors by lenders, and this could protect you as well, as long as you purchased a policy. People do make mistakes, and you want to make sure you have this insurance. A home purchase is the largest purchase of your lifetime. Make sure you talk to your attorney or title agent for further reasons why you should buy a title insurance policy.
I will be glad to answer questions about this process. Call me, Sherry Bitner 941-504-1445 or email me at Sherry@SherryBitner.com