RE/MAX New Dimensions

What Is Title Insurance?

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When you buy a home, there are so many different things to worry about, Title Insurance should not be one of them. However, if you are well informed about title insurance, and learn more about the process, you can end up saving hundreds of dollars and prevent future headaches. C.A.R.E. Title, Inc. can give you the highest quality, most reliable policy available, and leave you with the peace of mind of a protected and guaranteed asset.

The Purpose of Title Insurance. Title insurance guarantees that no one else can claim your new property. This gives you the confidence that you will not incur unexpected debts, or end up losing your home entirely. Even if you have owned a property for years, unforeseen problems can arise that would place your ownership in jeopardy. Title insurance means that the lender can be reassured of its loan, and that you can be reassured of your purchase.

Title Insurance Protections . There are any number of different problems that can arise when buying a home. A previous owner could have a lien on the property, which would become the new owner's debt. A lost heir could have  a claim to a property. In a divorce or separation, one of the owners could take out a mortgage on the property without the other owner's knowledge. Other potential problems range from fraudulent ownership and sale to boundary and fence disputes with neighbors.

Title Insurance guards against these and other potential pitfalls. If you have title insurance, the title company will handle any litigation or payments. In the even rarer event of total title loss, the title company can either pay or buy the mortgage from the bank. Without a title policy you could be forced to move, and could legally be required to pay the debt on a house you no longer own.

People regularly insure their homes against fires, floods, and other unforeseen disasters. In a natural disaster, though, you would still own the land  itself. Title Insurance protects against those risks that could take away the property itself. For all that, Title Insurance coverage lasts as long as you own the home, with only the initial premium.

Types of Title Insurance.   Most banks require that you purchase Mortgagee Title Insurance for purchases.  This only guarantees the bank; you are not protected from property problems.  Protection for you comes when you have an Owners Title Insurance. Your title policy guards your home against legal challenges from other people with claims, boundary disputes, and other factors that could threaten your ownership.

Cost of Title Insurance. Title insurance rates are promolgated and set by the State of Florida, and are the same no matter what title insurance company you choose.  Fees are based upon the cost of the house.  This insurance has only one premium; one payment at the closing and guarantees your property for as long as you own it.

Other Important Home-buying Considerations.  As part of your title insurance coverage, when purchasing a house you should also consider getting a survey done by a licensed land surveyor. Only a surveyor can tell you for sure that the house you looked at is really on the land you bought. In the absence of a survey, the title insurance will be subject to anything an accurate survey might show.

Glossary of Common Title Insurance Terms:

(Please note: These definitions are intended to give basic information about real estate terms.  These are not legal definitions, and should not be considered exhaustive or complete.)

Abstract: A document showing the history of a property, as shown in the county's public records.  This generally includes each change of ownership, as well as mortgages and liens.

Closing: This is the final meeting, at which the property is officially purchased, paid for, and signed over.  A closing may take place at a lawyer's office, or at the bank, or at the title insurer's office.

Deed: A legal document that describes the property (based on past surveys, official maps, surveyor's landmarks, measured distances, or other references), and states who owns the property.  Deeds are public documents, filed with the County Clerk.

Easement: Rights, stated in the deed, that belong to someone other than the property's owner.  This could mean the right of a neighbor to use a driveway, the right of power company trucks to use roads on the property to access their lines, or similar rights.

Title Insurance: A form of title insurance that protects the property buyer.  This protection is against title problems arising from competing claims to the property, liens, mortgages, or judgments.  This policy covers legal challenges, as well as refunding the value of the property in extreme circumstances.  For complete details, talk with your title abstractor.

Lien: A financial claim on the property.  A lien gives a third party the right to a portion of the money from the property's sale.  The most common type of a lien is a mortgage, because the bank has a right to a refund of their money from the property's value.  However, liens can also be filed by unpaid contractors ("mechanic's liens"), or courts ("judgments").

Mortgage: A type of lien, in which a bank or a person lends the money to buy a property.  The property itself is the collateral in a mortgage, so that the lender can take the property if the owner doesn't comply with the mortgage's terms.

Mortgagee Insurance: This is a title insurance policy issued simultanioulsy at closing that protects the mortgage lender from default relating to the title.  Mortgage insurance is usually required by banks issuing mortgages.  It provides no protection for the actual property owner, though, which distinguishes it from fee insurance.

Title Insurance: Title insurance is a form of insurance that guarantees an owner's claim to a property.  This guarantee comes after a title company has performed an abstract, of public documents, to uncover parties with competing claims to the property (heirs, liens, mortgages, etc.)  Title insurance has several forms, including mortgagee title insurance (protecting the lender), and owners title insurance (protecting the owner).