Title Insurance - What You Should Know

1. Variety of policies

There are three basic types of Title Insurance that may be issued by insurers. They include "buyers' title coverage", "lenders title coverage" and "owners' title coverage". Policies for a buyer cover you from the date that the last liens were found on record up through the date that you actually take ownership of the property. Policies for owners are known as 'extended coverage' policies which will protect you from claims which might arise from past items that may not be found in a regular title search. Policies for lenders are specifically designed to insure the lender that no liens exist on the property which cause the loan they are granting to be subordinate to any other liens.

2. What isn't covered?

Title insurance generally does not cover any imperfection which may not be found by doing a thorough title search. These may include unrecorded easements, liens or money obligations; unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances, or against the rights or claims of persons in possession of the property which are not shown by the public records. Title insurance may be obtained by the owner to cover these potential imperfections but it will result in the requirement of an additional premium payment. You should carefully review the terms of any buyers' title insurance (or owners' title insurance) to see specifically what is covered and not covered.

3. When is title insurance issued?

Owners' title insurance is typically issued as soon as a deed is delivered to the buyer and recorded with the Registrar of Deeds or County Courthouse. A purchasers' title policy would be issued after a purchase and sale agreement or contract is agreed upon and signed by both buyers and sellers. A lenders policy is issued immediately after a mortgage has been legally processed and recorded in accordance with local regulations.

4. If I bought the land and had my house built then why do I need to have title insurance when I sell the home?

Title insurance coverage is to protect the buyer, the owner and the mortgage company against any claims that might arise as a result of tax assessments, court orders, liens, judgments or any other lien which may affect the status of a title. These may be as simple as a contractor who failed to remove a mechanics lien after being paid for work completed or as complex as a title dispute resulting from a divorce.

5. Is pricing for title insurance fixed at one rate?

Title insurance rates are determined by several factors including the type of coverage that is provided, the value of the home, the value of the underlying land the home is built on, etc. Generally, title insurance premiums are paid in one premium payment at the beginning of the contract, and the contract remains in effect as long as you, your heirs or successors hold title to the property. All title insurance companies must have their rates disclosed to the Florida Financial Division for monitoring.

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