What is title insurance? How does it work? Do you need one? Read on as we provide the essence of what you need to know about owner’s title insurance.
What Is Title Insurance?
Like any other type of insurance, title insurance, which is also called owner’s title insurance, is a form of financial protection. Title insurance insures you against loss due to legal issues that may arise with your property after you purchase it. If, for example, title was improperly conveyed from a seller to a buyer (perhaps an ex-spouse on the deed never signed off on the sale, for instance), title insurance helps you shoulder the financial costs of making it right.
The first part of the protection for your title happens before you close on your new home. Your real estate attorney runs what’s called a title search, inspecting deeds, court records, and other documentation that might detect a problem with the title.
The goal of this search is to determine as best as possible that the seller has a right to transfer ownership.
Common issues that may arise during a title search also include:
- Unpaid property taxes
- Old or current mortgages
- Restrictions on land use
- Judgments against the seller
What a Title Search May Not Reveal
Some hidden hazards to the buyer are much more difficult to detect. These can include:
- Defective deeds
- Fraud and forgery
- Hidden easements
- Mental incompetence in a prior seller
- Errors in public records
- Confusion resulting from identical or similar names
These issues can spring up even years later to affect a current owner. For example, if your seller misrepresented their marital status, claiming they were single when they were not, their spouse may later claim they still own the home and bring a legal case against you.
Title insurance aims to cover or minimize your losses in situations like these.
Is Title Insurance Mandatory in Florida?
No, Florida law does not require that you buy an owner’s policy. But even though you are not legally bound to do so it is a very wise investment.
What’s more, nearly all closing agents will require that all buyers purchase title insurance before they will close the deal.
Benefits of Title Insurance
Title insurance, and the process involved with acquiring it, conveys a number of benefits.
Among other things, it enables a buyer to:
- Discover problems early. Underwriters of title insurance require that a thorough examination of prior documentation is done well in advance of a closing, so problems, also called “clouds on title,” will likely be discovered before you buy the property. If a cloud on title is uncovered, your real estate attorney will take actions to resolve the situation.
- Minimize financial loss. Should a problem with the prior chain of title be uncovered after a sale, the new owner may face legal claims from prior owners, something title insurance financially protects you from.
- Peace of mind. When you have title insurance, you know that someone has examined your chain of title carefully and also that any unexpected issue that may emerge in the future will be covered. This will help you sleep better–in your beautiful new home.
Who Pays for Title Insurance in South Florida?
In South Florida, the party responsible for paying for title insurance varies by county.
The person who chooses the closing agent generally pays for the title insurance.
This falls to the buyers in Broward County, as well as in Miami-Dade County.
In Palm Beach County, it is the seller who selects the closing agent and pays for the title insurance.
In some cases, determining who pays for title insurance can be part of the terms negotiated before the sales contract is signed.
How Much Does Title Insurance Cost?
The cost of title insurance is set by regulation and therefore is consistent across all closing agents. This amount is known as the “promulgated rate.”
- For properties with a purchase price up to $100,000, title insurance costs $5.75 for each $1,000 of the sale price.
- For any amount of the purchase price over $100,000, title insurance costs $5.00 for each $1,000 of the sale price.
- Very expensive homes may be subject to a slightly different amount.
Title insurance is paid for at the time of closing, so you don’t have to lay out the cost beforehand.
And unlike other insurance policies for which you pay annual premiums, title insurance is a one-time payment at closing.
Should you hire a lawyer to handle your title insurance?
In South Florida, several types of people can be hired to be your closing agent and handle your title insurance.
This can be a title company–often one pushed by your Realtor, perhaps because their company has a financial relationship with the title company.
A better choice is a real estate attorney. When you hire a real estate attorney as your closing agent, you generally pay the same amount as you would hiring a title company, and you get the additional protection and advice afforded by having an experienced attorney watching over your deal. Essentially, you get two professional services for the price of one.
Real estate attorney Gary M. Landau and the Law Office of Gary M. Landau, P.A. has handled thousands of closings involving title insurance in South Florida.
Talk to an Experienced Title and Real Estate Attorney Today
When looking for a partner to help with your title and real estate needs, don’t search for “real estate attorney near me.” Find an attorney with years of experience and a quality reputation.
At the Law Office of Gary M. Landau in Coral Springs, FL, we have over 25 years of experience handling all types of title insurance matters for clients in South Florida. Old Republic National Title Insurance Company, an established and reputable firm, underwrites all our title insurance policies.
We can answer questions like “What is title insurance?,” explain your options, and support you throughout your real estate purchase process — in person, over the phone, or on ZOOM.
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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction.