First off, let’s start with an explanation of what title insurance is actually all about. As part of the closing process when buying a home, a property title search is done to ensure the title is clear. A title search is an examination of the property including looking for defective or missing documents that might make previous sales transactions invalid, claims by the government or creditors, outstanding tax liabilities, restrictions, easements, and construction liens. In addition, a title search will confirm the ownership of the property.
Many times there are unforeseen situations that might be unknown even to the seller of the property. A number of issues can prevent a title from passing to another party, or if discovered after the sale of the property, can result in a major financial loss to the buyer. Title insurance is a policy that protects buyers after closing on the home from losses by titles that are contested based upon past rights and claims asserted by others, as well as issues that may have been missed in a title search.
Types of Title Insurance
There are two types of title insurance. One protects a lender and is known as a lender’s policy, and the other protects the buyer, and is referred to as an owner’s policy. In Florida, as in all states, any federally insured lender will require at least a lender’s policy. A lender’s policy will ensure the lender’s investment is protected should a claim against the property arise even years after closing on the property, and until the mortgage is paid in full. So in the case of a home purchased with a mortgage, yes, lender’s title insurance is required!
On the other hand, an owner’s policy is not required, but there is much to consider before disregarding this as optional. It is true that as long as the lender is protected with a lender’s policy, a buyer is free to close on the property. However, and this is a big however, title insurance in place that protects the lender doesn’t mean the buyer is protected. Think about what could happen if an issue comes up down the road, either before or after the mortgage is satisfied. The buyer can then be at risk of losing the equity and the property.
Also, consider the risk should the buyer pay cash for the house. If the buyer is not getting a mortgage, then a lender’s policy will not be required. Failing to have an owner’s title insurance policy can result in claims or disputes against the buyer’s rights to own and use the house, and again, could result in a major financial hit. Even if a buyer believes a title is free and clear, without title insurance they are putting their investment in the home at unnecessary risk. Having an owner’s policy is not a requirement, but it is a very good idea!
Seek the Counsel of an Attorney Specializing in Title Insurance
Fees for the title search and title insurance can be paid for by either the buyer or the seller, depending on what is customary in the county where the property is located and what is negotiated between parties. It makes no sense to cut corners when it comes to finding, negotiating, and closing on a home. Whether you are buying your first home or are an experienced real estate investor, purchasing a title insurance policy to protect yourself and your property from any claims or potential disputes is a critical step towards ensuring financial security and peace of mind after closing. Contact the attorneys of Glenn & Phanco, P.A. today. We will ensure your real estate transaction goes smoothly and that your hard earned investment is safeguarded and enjoyed!
Disclaimer: This blog is not intended to provide advice or legal information. All facts, information, and data provided on this blog is for informational purposes only as well as to give general information and a general understanding of the law, and not to provide specific legal advice. By reading this blog you understand that there is no attorney client relationship between you and the publisher. This blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
