What is Title Insurance and do I need it?

Title insurance is an insurance policy that you can purchase for a one-time fee during the closing of your new property to protect your legal claim to your new home. Many consumers may find the real estate closing process to be mystifying and confusing because it is so far removed from the consumer facing aspects of the home buying process. However, a quick look under the surface can clear up potential confusion and help you understand why you should care about the deed to your Florida home.

You’ve found your dream home in Florida. Protect it a deeper understanding of title insurance and it’s role in the real estate closing process.

What is title in a real estate transaction?

Title for real estate is much the same concept as your vehicle. Your deed is recorded with the proper government authorities giving you a legal claim to your property. Without a properly recorded deed, you could find yourself exposed to potential liabilities including the loss of your home. Title defects, improper or incomplete deed histories, or even a death in the family could cause potential headaches for you if you do not pay attention to the details surrounding the process of producing and recording your Florida property deed.

What is real estate abstracting?

The sale of a Florida home, condominium, multi-family housing, or commercial property is a legal process. As with any legal process, research and the integrity of finer details are key to a successful execution of the sale. A component of your engagement with your title company is that they will conduct a thorough search of the entire legal history of your property. This is called a real estate abstract. This history of your property will reveal any potential issues with the deed of your property which can be remedied prior to closing. If no issues are found, this record is used to verify the integrity of your right to ownership.

However, issues can still arise as record keeping is handled by local authorities and is conducted in many different ways throughout the United States.

What is an Owner’s Policy in title insurance?

Although your title company will have verified the history of your property, that does not mean that a potentially legitimate claim to your property can arise in the future. As noted, record keeping is fragmented and there are many possible claims that can be made against properties from fraudulent representation to improperly executed wills and so much more.

In title insurance, an Owner’s Policy gives you, the property owner, peace of mind that if a legal claim to your property is made, the cost to defend and settle such a claim would be handled by your policies underwriter. While title insurance claims are rare, they do happen and can result in the total loss of a property with no compensation in the worst cases for uninsured parties.

Best of all, an Owner’s Policy is transferred to your heirs upon your death meaning that your property’s integrity is covered so long as you and your heirs maintain ownership.

What is a Lender’s Policy in title insurance?

If you finance the purchase of your property, you will obtain a mortgage loan from a bank or credit union. Your lending institution will obtain their own independent title insurance policy against your property to protect the value of their investment in the rare situation that a title insurance claim is filed. It is important to note that this policy does not cover your right to own your property and will compensate the bank for losses as a result of a claim but will not protect you.

All lending institutions will purchase a Lender’s Policy when issuing a loan to facilitate the purchase of a property. If your lender wouldn’t lend to you without a title insurance policy, you shouldn’t purchase your property without a title insurance policy.

If you still have questions about title insurance, your real estate closing, or the role of a title company in your real estate transaction, please do not hesitate to give us a call or send us an email. Our knowledgeable and experienced team is ready and able to help give you clarity and peace of mind for your next Florida real estate transaction.