What Does Title Insurance Cover?
May 30, 2018If you're one of the lucky Americans who has finally reached the goal of buying a new home, chances are good you will soon need to know what title insurance is and why you need title insurance. The decision to purchase a home is one of the most important decisions you will ever make in your life. While buying a new home is an exciting venture, it can also be stressful. The fun is finding the right house to buy. The stress comes when you get down to the negotiations of buying the house and to the closing. That's why it's important to have a title agency ready to help you navigate all the legalities and paperwork associated with closing on your dream house.
What Is a Title Agency?
A title agency is a company that specializes in helping you manage all that goes along with buying a new house. A title agency provides title insurance, title research, and closing services to help ensure that closing on your new home is a stress-free process.
A title agency can be hired by anyone from a realtor, the buyer, the seller, or the lender. Sometimes there is more than one title agency involved in the closing of a home or property. Regardless of who hires the title agency, its presence throughout the home buying experience is beneficial to all parties involved.
Title Agency Services
One of the most important services provided by a title agency is that they provide title insurance. There is lender's title insurance and owner's title insurance. It's important to distinguish between the two because lender's insurance only protects the institution lending the money to purchase a home. In most cases, if there is a public lender involved, the lender will require lender's title insurance. Title insurance is the lender's assurance that no issues will arise with a title that will negatively affect the lender's investment should the buyer default on the loan. A lender will have lender's title insurance regardless of whether or not there is title insurance elsewhere. The lender's insurance in no way protects the buyer or seller, so always be sure to ask specifically about the type of insurance that will benefit you as a buyer. A title agency will be happy to answer your questions and will start the process of getting owner's title insurance for you.
Owner's title insurance, likewise, protects the buyer by assuring that the property being purchased is free of any claims by any other party. A buyer is not required to purchase owner's title insurance, but it is advisable. It ensures you, as a buyer, that the title agency has confidence that you are purchasing property that no one else can lay claim to. The role of the title agency cannot be overstated. A title company offers essential services that are designed to protect all parties involved in a real estate transaction. Title companies often act as a combined agent of not only the insurance company issuing the title insurance, but as an agent for the buyer, the seller, real estate agents, and mortgage lenders. A title company will examine titles, issue insurance policies, and facilitate all the extensive details associated with closing on a property, including recording and filing all of the paperwork associated with the closing of the sale of the property in question.
There is a difference between a title search, which is one service provided by a title agency, and title insurance, which is also offered through a title agency. The title search is a search performed by the title agency to help identify any issues that may arise with the sale of property. Title insurance is the insurance issued to protect you against those issues. Title insurance can protect you from claims against the property that may not show up in the title search. Some of these claims or issues include titles that have been forged, titles that were misrepresented, titles signed by individuals who are deceased, mistakes in filing, inaccurate descriptions or representation of the property in question, undiscovered easements or liens, and many other unforeseen issues that could create a block against legal sale of the property. Title insurance protects the buyer forever and will also protect the property if it is passed on to heirs.
Some title insurance agencies also provide escrow services. The title company will set up an escrow account that holds all of the money and documents needed to close on a property. The contents of the escrow account won't be released until all of the requirements of a sale have been met by all parties involved. If, for instance, the title company finds there is another party who can claim partial or full ownership of the property being sold, the sale cannot be completed until the seller has resolved those issue. If the issues cannot be resolved, the sale of the property can't happen. A title agency that provides escrow services is ideal because it streamlines the entire process. Escrow is an important aspect of the home-buying prospect because it allows a third party to keep control over all of the documents and finances associated with the sale of a property, giving both the buyer and seller assurance that everything will be properly disbursed when the time comes to fully close a transaction.
Do I Need Owner's Title Insurance?
With so many costs associated with buying a piece of property or a home, the buyer might be tempted to try and cut costs by not purchasing title insurance. You will typically not have a choice about lender's title insurance, but you are not obligated to purchase title insurance for yourself. This is not a good idea. Title insurance is your protection as a buyer that there will never be a claim against your property. A title company does thorough research on a title's history and generally clears the title effectively before a sale is made, but on the off chance that something is missed and comes up in the future, your owner's insurance will protect you from any loss due to claims on a property you've purchased. For this reason, it's always wise to purchase title insurance.
There are many unforeseen and hard-to-detect scenarios that could occur and cause problems for you down the line if you haven't purchased the title insurance. Renters have been known to pose as owners to sell a property they have no right to, lost heirs to a property or co-owners could appear out of the woodwork, or the seller may have purchased the house or property under a will that was outdated, making his ownership and rights to the house questionable. Any situation in which the seller of the house doesn't have a clear title to the property or where someone else might have a stake in the house is a reason title insurance is a good idea. One scenario may be that extensive work was done on the house and not paid for. The company doing the work may have the legal right to put a construction lien against the property until the bill is satisfied. This situation may not come to light until after you've purchased the property. Maybe the seller of the house has an ex-spouse that has partial ownership in the home. Court judgements that award the property to a previous spouse or issues with previous mortgages can also come into play. Title searches are generally effective, but even the most thorough title search doesn't always detect turn up every possible circumstance. This is why lenders require title insurance before they will make a loan. And while owner's insurance isn't always required, it is a good safeguard. At the very least, the owner of a title insurance policy will not have to pay out of pocket for court costs defending the right to the property, and if a claim ends up being valid, the owner of the policy can be covered for anything put into the property up to the point of the claim. These are just a few ways having title insurance could protect you that might not have come up in an initial search.
How to Get Title Insurance
The good news is, getting title insurance is an easy process. Your title agency will set it up for you. There is a fee involved, which is nominal for the peace of mind you'll have knowing that you're protected from financial losses in the event something is discovered that could compromise the validity of the sale of the property. In some states, sellers may actually purchase the title insurance for the buyer, making title insurance an even more attractive addition to the closing package.
Key Title & Escrow is a Florida title and escrow company that has been serving the real estate industry for over 23 years. We are a full-service title and escrow company that provides a full range of services to meet the needs of our clients. Our goal is always to take the stress of buying and selling real estate away from the client by facilitating a smooth, trouble-free experience from inception to the closing table.
We have developed a reputation for quality and efficient closings. We strive to offer customer service of the highest of standards, and we take pride in the professionalism and honesty we give to all our clients. If you are in need of a title and escrow agency you can count on to get the job done for you, Key Title & Escrow is the premier Florida title and escrow company you need. If you're ready to buy a new house or property in Florida, Key Title & Escrow serves the entire state of Florida and even offers after-hours closing and settlement services to give you the convenience and service you deserve.
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