Who Pays for Title Insurance in Florida
July 13, 2018Buying a home is one of the biggest American dreams. What many new homeowners don't know is that it can be one of the most stressful things you will ever do. If you have never navigated the complex waters of buying real estate or been faced with the mound of paperwork involved, not to mention all of the language associated with the process, you may find yourself in information overload. You'll probably have a million questions. One of the important questions is what is title insurance? The next questions might be where do I get title insurance and who pays for it? Here are some answers that can help put you at ease.
Title insurance is an important factor when you are buying a new home. The purpose of title insurance is to protect both the buyer and the lender against any sort of financial loss in the event that something comes up that would prevent the seller from selling the home. Imagine buying a home and finding out the person who sold it to you wasn't legally able to sell the home. There are many reasons this could happen, and without title insurance, both the buyer and the lender, and in some cases even the seller, stand to lose a great deal of money. For this reason, title insurance is a crucial part of the home-buying experience.
The title insurance industry has been a huge part of protecting lenders, buyers, and sellers in the sale and purchase of real estate and homes for more than 125 years. The extensive work of the many title companies across the nation helps to ensure the quick, secure, and efficient transfer of homes and land, which builds confidence among consumers and lenders when making any kind of investment in real estate. The sole purpose of title insurance is to help buyers and sellers understand their rights and obligations and to provide protection to ensure those rights and obligations are achieved without the risk of a financial loss that might occur from circumstances either known or unknown by the seller of a property.
Who Pays for Title Insurance in the State of Florida?Who pays for title insurance in Florida? What legal responsibilities are there regarding whether or not title insurance is required in Florida? In Florida, the party responsible for handling the cost of title insurance varies from one county to another, and it can often be negotiated in the contract. Typically, the seller will pay for the title insurance in the state of Florida, with the exception of just a few counties. These:
- Broward County
- Sarasota County
- Miami-Dade County
- Collier County
The cost of the title insurance is included in the closing costs of the real estate being purchased. Costs can vary, but are typically not unreasonable, and because they are part of the closing, consumers generally don't notice the added expense. The fees for title insurance in Florida are governed by Florida law. Title insurance companies are monitored by the Florida Department of Financial Services, so fees will be consistent from one company to the next.
Finding a title loan company is not difficult. Many lenders and real estate agencies already have a working relationship with many title agencies, or they may be able to recommend one. There is no obligation to use a single title agency, and often there might be more than one title agency present at a closing to represent different parties. Typically, new buyers who aren't familiar with the process will rely on their real estate company or lender to suggest a title insurance company. In most cases, the party paying for the title insurance will choose the company, but there can be negotiation between parties if one party has an issue with the title company being used. Ultimately, the consumer gets to choose the title insurance company, and the party paying for the title insurance will have the final say.
The great thing about title insurance is that it differs from other types of insurance policies in that it only requires a one-time premium. That one-time premium is the consumers assurance that should any issues arise regarding the property in the future, the consumer will not lose any money they have already put into the purchase of the property.
The cost of title insurance does vary depending upon the purchase price of the property. The one-time payment is made at the time of settlement. In Florida, the title insurance premium is based on a promulgated rate calculation and this rate is determined by the state.
Understanding the Types of Title InsuranceThere are two types of title insurance a homeowner should be aware of. First, there is the owner's title insurance, or an owner's policy. This kind of title insurance is not legally required, but it is a good idea for the potential buyer to purchase this extra layer of protection. If for some reason a real estate transaction happens and years down the line there is any type of situation in which legal ownership of a property can be questioned, an owner's policy will protect the property owner. There are a few reasons this could occur. The seller may have lied about his marital status and a spouse could have legal claim to the home, or an unknown heir could surface after the death of the seller. It's possible there are unpaid taxes or a lien on the property undiscovered at the time of the sale. Some of these mistakes might be legitimate oversights, or they could be an intentional attempt by the seller to commit fraud.
The other type of policy is the lender's title insurance, or a lender's policy. This type of policy is always required by a lender when a buyer borrows money to purchase real estate. This is without exception regardless of the state. Without a lender's policy, the lender would be risking a financial loss in the event a property is sold without a free and clear title, even if a claim came up many years after the sale of the property.
In Florida, whenever a home or land is purchased using money borrowed from a federally insured financing company, the lender will require the buyer to purchase insurance, and before any loan can be completed, the lender will require the buyer to provide the bank with title insurance. This is a requirement of all mortage loan institutions in the state of Florida. The lender's policy will only protect the lender and has no relevance to the buyer or seller at all.
How Does Title Insurance Protect the Homebuyer?Before a title insurance policy can be issued, a title agent checks for defects in the title that could put the right to own the property in danger. Any problems with the title that prevent it from being free and clear, including liens by any company or entity that has a legal claim to the property, missing heirs that may be forgotten and suddenly appear, unpaid taxes, and a host of other potential problems, could prevent the sale of the property, if not at the actual closing, years later. This could result in the loss of your property and any money you have invested.
Sometimes these issues with a title occur because a seller is trying to commit fraud and is knowingly not mentioning necessary information about a property, but many issues that arise with a title at a later date are the result of information that wasn't detected during the title search. This can happen even in the best of circumstances. Choosing the best title insurance company, or finding a trusted full-service title agency, can eliminate much of the risk, but even the best companies can miss something that isn't a matter of record, which is the reason title insurance is so important, and why lender's will require it before they issue a loan. Title insurance makes sense for the lender, who is making an investment in the buyer, and title insurance makes sense for the buyer who will be taking on a huge expense.
Title insurance is a lot like other types of insurance policies. If you buy a house and sometime after purchase of the property a claim is made against you that challenges your right to own the property, title insurance is your protection. The title insurance policy will provide you with a legal defense. It's important to read the terms of your policy for full details of the coverage, but basically title insurance will cover court costs and other legal fees associated with defending your claim to the property. If a valid claim is made to the home or property by another party, title insurance reimburses you for your financial loss according to the face value of your policy.
This is good news because you won't be out the money you've invested up to the settlement of the claim. Unfortunately, title insurance can't ensure you will be able to keep your home in the event a claim is valid. It's always possible to keep the property you've purchased, but separate negotiations would need to occur with the claimant who wins a judgement.
Potential Problems with a TitleThere are many reasons lenders require title insurance. It's a good idea for the buyer to get owner's title insurance for these same reasons. A lot of people assume all possible issues that could occur and invalidate the sale of real estate are taken care of at the time a title search is performed. In most cases, title searches and initial vetting are sufficient, but issues can crop up at any time. Some issues might not even present until many years after a property has been purchased. The good news is, an owner's policy will protect you from financial loss even if an issue arises years down the line.
A title search can reveal many issues that can prevent the legal sale of real estate. Liens, restrictions on the property can include: restrictions regarding the use of the property, taxes that have not been paid, unpaid mortgages, legal judgements against the seller that might prevent the sale of the property, and property with mineral rights that belong to someone else.
It's established that a lender's policy will be required if you're borrowing money to purchase real estate. The owner's policy is optional, and while many buyers might opt out of purchasing an owner's policy, there are several reasons why it's not a good idea to do any purchase without out it.
Even the most thorough title search cannot be guaranteed one-hundred percent effective. While most title searches are accurate, things can be overlooked or left undiscovered. Information given not only by the current seller, but information given (or not given) by previous owners of the house could have cause valid information about a title to be undiscovered. There could be people with legal claims to the property, such as a long-lost heir who shows up one day out of the blue to lay claim to the property you've legally purchased. Other issues could arise as well, including deeds that are in some way defective, forgery, the mental condition at the time of a sale of the person selling the house, clerical errors, omissions of truth, or any type of legal claim someone other than the seller might have to the property you've purchased. Without title insurance, you are at risk of losing your home, property, and any money invested in the purchase. For this reason, not having an owner's title insurance policy is risky.
There are many other reasons a title might be problematic or "clouded." If, for instance, the seller had a new construction done to the house that hasn't been paid off, the contractor has the right to put a lien against the title for payment of the work. If taxes have not been paid, a lien can be put against the house for payment of taxes. A house in foreclosure would also cause an issue with a seller's ability to sell a property legally. There are, in fact, a number of reasons a title can't be cleared. Some of them might not be immediately apparent during the initial title search, which is why a potential buyer should always consider purchasing an owner's title policy.
The process of buying a home can be stressful. The closing process can be especially stressful because buyers will be faced with legal jargon and terms they don't understand, particularly if they have never before purchased real estate. There is always a ton of paperwork involved in the process that can be intimidating. In Florida, the closing transaction is usually handled by a title insurance agent or a lawyer. The title insurance company holds all the money and documents in escrow until the end of the closing process, when they facilitate the exchange of title and money, disburse funds as necessary, and close the deal.
How to Find Title Insurance If you are purchasing real estate in Florida and you are looking for a title insurance company, a title agency is the place to start. Finding a title agency you can depend on for all your title and escrow services is the best way to navigate the complicated process of buying real estate. Here at Key Title & Escrow, we can not only help you find the title insurance you're looking for, we are your best option for all things concerning the purchase of your home. We provide a variety of title and escrow services that include property title searches, searches for judgement and lien, record owner searches, Florida title and homeowner's insurance, and a range of other services.
Key Title & Escrow is the best Florida title and escrow company in the state. We've been serving the real estate industry for more than 23 years and we've developed a reputation for efficient, stress-free closings. At Key Title & Escrow, we take pride in our work and strive hard to provide customer service that adheres to a high set of standards. Our professionalism, fast and reliable service, and our commitment to getting the job done is evident in everything we do. If you are in need of title and escrow services, make Key Title & Escrow your first choice for title and escrow services in Florida. You won't be disappointed in our quality of service and our level of commitment to serving the needs of our clients, whether you are a buyer, seller, or a real estate professional. We're equipped to handle all your real estate transactions.
Once you have placed your order with us, you can be assured that we are big enough to get the job done but small enough to care about every closing as if it is our only priority. We handle closings state wide and even offer after-hours closings for your convenience. Whether you are a lender, a realtor, a seller, or a buyer, you can be assured Key Title & Escrow is the title and closing agency for you. We will always have your best interest at the heart of everything we do, and our goal will always be to provide you with the fastest, smoothest closing possible. If you are in need of title insurance, title and escrow services, and closing services, contact Key Title & Escrow today.
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