Title Insurance - What is it?
Title insurance is a contract to indemnify against losses arising through defects in the title to real estate. If the title is insurable, the company guarantees against loss due to any defects in title not specifically set forth in the policy. It also pays all expenses in defense of any lawsuit attacking the title as insured.
Who needs it and Why?
Anybody who wants protection from serious protection from the title liabilities that can turn a real estate purchase into a real nightmare. That means both the buyer of the property and the lender who has an interest in the property being purchased.
Why Do a Buyer and a Lender Need Title Insurance?
When you buy a couch, a television set, or a computer, you have no need to know whether the former owner is married, single, or divorced. You are not interested in whether taxes have been paid or if there are lawsuits or judgments against the former owner. But when you buy real estate, all of those things are vital to know--and many other things, too. A buyer and a lender must have a complete investigation made on every point or you may discover that the property you bought and paid for is not actually yours at all!
In every real estate transfer the matter of title examination invariably arises, and that is usually followed by a question as to the need/nature of title insurance. Admittedly, the ordinary consumer/home purchaser often questions whether title insurance is really necessary when an examination of the title has been completed by an accomplished title examiner or real estate attorney, especially if the examination of available title records shows no adverse information which might raise questions as to the marketability of the title.
"But I have a deed and a title search was originally conducted," many people say, "isn't that all I need?" No! A deed is not proof that the seller is actually the owner. Nor does it contain information regarding the rights others might have in the property, unpaid taxes, mortgages, easements, and restrictions. "Can't I find out about their rights from the public records?" Yes, most of them. However, all of the necessary information is not contained in a single book, in a given office, or even in the same county. Add to this possible errors in indexing, improper searching, errors in examination ... in other words, the human element. Besides, what is not in the public records is often what causes title trouble!
THE PROCESS: How does it protect you?
First, CLEAR TITLE SERVICES, INC. conducts a Title Search, a detailed description of the public records related to the property. The search will confirm the seller's right to transfer ownership and discover any legal encumbrances or burdens on the property. Next, during the Title Examination, we review the Title Search documents to determine if the property is encumbered.
A TITLE INSURANCE POLICY is then issued, to protect the seller from errors in the public records, unrecorded liens, or hidden defects not disclosed in the public records such as forgery or document fraud, even heirs who might turn up later to make a claim.
TWhat Title Insurance Protects Against:
Here are some of the most common HIDDEN RISKS that can cause a loss of title or create an encumbrance on title:
- Forged deeds, mortgages, satisfactions or releases of mortgages, and other instruments.
- Impersonation of the true owners of the land by fraudulent persons.
- Outstanding prescriptive rights not of record and not disclosed.
- Undisclosed or missing heirs.
- Liens from unpaid estate, inheritance, income, and gift taxes.
- Defective acknowledgment due to lack of authority of notary. (Acknowledgment taken before commission or after expiration of commission.)
- Descriptions apparently but not actually adequate.
- Deed from bigamous couple - prior existing marriage in another jurisdiction.
- Mistake in recording legal documents. (For example, incorrect indexing or errors and omissions in transcribing, and failure to preserve original instruments.)
- Special assessments where they became lien upon passage of resolution and before recordation or commencement of improvements for which assessed.
- Recorded easement, but erroneous ancient location of pipe or sewer line which does not follow route of granted easement.
- Undisclosed divorce of spouse who conveys as sole heir of deceased consort.
- Deed from record owner of land where he has sold property to another purchaser on unrecorded land contract and the purchaser has taken possession of premises.
- Tax titles invalid because of irregularity of proceeding, reversal of court decisions, or lack of decisions on points of law.
- Fraud, duress or coercion in securing essential signatures.
- Deeds by persons of unsound mind.
- Invalid, suppressed, undisclosed, and erroneous interpretation of wills.
New rules, new regulations
When you purchase a Title Insurance Policy, you pay a single, one time fee. Yet, the policy remains effective until the property is sold. Title Insurance premiums are based on the contact price of your home. The rates are set by the Insurance Department of the State of Florida and are the lowest rates allowed by law. Check out our Rates page for more information.
New rules, new regulations
A mortgage company will most likely require a title policy for its own protection. This policy protects ONLY the lender and is referred to as the LENDER'S title insurance policy.
HOWEVER, to protect himself/herself against the many possibilities of loss due to title defects, a purchaser should insist upon an OWNER'S title insurance policy. The additional cost of an OWNER'S policy is nominal when purchased at the time of settlement simultaneously with the LENDER'S policy.