Title Insurance Frequently Asked Questions

What is title insurance?

Title insurance offers financial protection against title problems that might have been inadvertently missed in the title search process, might not be found in the public record or that may arise from fraud or forgery.

What types of defects does title insurance protect you from?

Title insurance protects you from claims of ownership by other parties. It protects you against losses from problems that arose before you bough the property, as well as liens and other similar matters. The provider will defend you in court if there is a claim against your property, and will pay for covered losses.

Are you required to get title insurance?

Florida does not require title insurance however, a lender will require you to buy a loan policy of title insurance to protect their interest.

How long does title insurance last?

A loan policy will last until the loan has been satisfied. An owner’s policy lasts as long as you or your heirs own the property.

Do you need to renew your policy?

Title insurance is paid for only once when you buy the policy and you will not need to pay for it again, unless you decide to obtain additional coverage, sell the property or transfer your title.

What if I transfer my title to a trust, an LLC, a business, or my children?

It all depends on the type of policy you have and coverage may no transfer along with your title. It is always best to check with an attorney, speak with your title agent, and/or read your policy.

Is title insurance the same as homeowners insurance?

No, title insurance is completely different from homeowners and other types of insurance. Unlike homeowners insurance which insures against fire, theft, floor and other kinds of property damage or loss. Title insurance strictly protects against losses from ownership problems that arose before you bought the property, but were not known at the time you bough the property. Title insurance does not guarantee that you can sell you property, or borrow money on it.

What’s the difference between a title policy and title commitment?

Title commitment is obtained before closing while the title policy is issued after closing. The commitment states that the title company is willing to issue title insurance under certain conditions and/or the remedy of certain problems. The title policy is what actually provides covers and covers the property.

What are the different types of policies?

Loan Policy:
The loan policy is required when obtaining financing and is issues to the mortgage lender. It protects the lender’s interest in the property until the borrower pays off the mortgage note. For a complete list of covered risks make sure to refer to the Covered Risks section of the Loan Policy.
Owner’s Policy:
The owner’s policy protects you against losses from ownership problems that arose before you bought the property, but that were not known at the time you purchased the property. Examples include losing title to your property due to fraud, errors or omissions in previous deeds, or forgery of a previous deed. The owner’s policy protects the buyer from the covered risks listed in the policy.

Commercial and residential properties have separate types of policies.

When do I need a loan policy?

When purchasing a property with financing most lenders will require a loan policy as a condition of obtaining a mortgage. The policy ensures that if a claim against your property arose and voids your title the balance of your mortgage will be re-payed. The loan policy covers up to the amount of the principal of your loan.

When does a loan policy expire?

The loan policy remains in effect unit the loan is paid off. In the event of refinancing your home, most lenders will require that you buy a new loan policy. Once the new loan pays off the prior loan your old loan policy will expire.

Do I get a discount on my new title policy if I refinance?

Yes, if you refinance within your first several years of ownership or purchase a property and/or the seller is able to provide you with a copy of a title insurance policy issues within the last three years than you can qualify for a reissue credit discount.

What happens if my home increases in value? Am I still covered?

If your home increases in value you are still covered for the value of your policy. If you improve the property or the value increases over time you can purchase an increase value endorsement to cover the increase in your property’s value.

Do Florida title companies charge the same for policy premiums?

Yes, Florida’s title insurance premium is based on a promulgated rate calculation, which is determined by the state of Florida. Furthermore Florida’s title insurance premium is also determined based on the purchase price of the property as follows: Purchase prices up to $100,000 at a rate of $5.75 per thousand; purchase price over $100,000 at a rate of $5.00 per thousand.

Do I get to pick my own title company or attorney?

You may choose any title company or attorney you want; you do not have to use a company that is selected by a real estate agent, builder, or lender. If you do real out to your realtor, builder, or lender make sure to ask for three referrals.

Section 9 of the Real Estate Settlement Procedures Act (RESPA) prohibits sellers from conditioning the home sale on the use of a specific title insurance company. You may contact the Consumer Financial Protection Bureau, who regulates RESPA, if you have a complain that you wish to file.

What is a title defect?

A title defect is anything that causes a title to be considered invalid or defective in some way. The following are some examples of title defects:
– Invalid documents as a result of forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation.
– The failure of a person or entity to have authorized a transfer or conveyance of a property or parcel.
– Any document affecting the title that is not property executed, signed, notarized, witnessed, or delivered.
– Easements not apparent on your land that are undisclosed or unrecorded.
– No right or access to and from the parcel.
– A document that is executed using a falsified, expired, or otherwise invalid power of attorney.
– A document not property filed, recorded, or indexed in the public records.
– Ownership claims arising out of missing or undisclosed heirs.
– A defect arising from an improper prior foreclosure.
– Restrictive covenants affecting your property that are undisclosed or unrecorded.

Certain lean issues may also cause title defects. Below are some examples of such lien issues:
– Any statutory or constitutional contractor’s, mechanic’s, or materialman’s lien for labor or materials that began on or before the policy date. Speak with an attorney about your rights and any lien questions.
– Lien for labor or materials furnished by a contractor without your consent.
– Other liens that may exist on your title that are not listed on your policy.
– A lien a previous owner failed to pay
— a deed of trust or mortgage
— a judgement tax or special assessment
— a charge by a homeowners or condominium association

NOTE: immediately notify your title company in that event someone files a lien or claims an interest in your property. Failure to do so may jeopardize your claim. It is best to contact the underwriter listed on the policy and follow their claims process.

What is not covered by a title policy?

The title policy will typically not cover mistakes, certain defects, financial issues, or rights issues. (see below)
– Defects that are created after the policy has been issued.
– Defects that you had knowledge of or created.
– Issues arising out of failure to pay your mortgage, or obey restrictive covenants or applicable laws.
– Specific taxes and assessments.
– The loss of your rights as a result from someone occupying the land. In this scenario the title company may need to inspect the land (there is likely to be an additional charge).
– Homestead, community property, or survivorship rights of a policyholder’s spouse.
– Claims from others in the event that your property is located on a body of water or has a river flowing through it.
– Condemned land, unless a condemnation notice appeared in the public record on the policy date or the condemnation occurred before the policy date.
– Violations of building and zoning ordinances and other laws and regulations related to land use, land improvements, land division, and environmental protection.
– Disclosed restrictive covenants limiting how you may use the property. Request copies of restrictions and have your attorney explain them.

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