When purchasing a home, you will hear your Realtor refer to an Owner’s Title Insurance Policy and a Lender’s Title Insurance Policy. Do you know what title insurance is or why you have to purchase it?
Both policies are only a one-time fee paid at closing. In the state of Florida, the seller traditionally pays for the Owner’s Policy and the buyer pays for the Lender’s Policy. The Owner’s Policy is for your protection and the Lender’s Policy is to protect your mortgage lender’s interest in the property. The Owner’s Policy remains in effect as long as you or your heirs have interest in the property you are purchasing and you could re-use the same Owner’s Policy if you were to refinance. If you are to sell the home within 3 years you may receive a discount on the Owner’s Policy that you’ll have to pay for the next buyers if you still have the original Owner’s Policy documents. The fee (premium) for the Owner’s Policy is calculated off of the sale price and the Lender’s Policy is off of the loan amount.
The seller pays to have a title search completed, which is when a professional at the title company will research public records and the chain of title on the property to ensure that there are no unresolved issues from past owners. If there are issues, the title company will work to resolve them in an effort to provide you, the buyer and future homeowner, with clear title. Not only does your title insurance provide you with clear title, it helps you maintain clear title throughout the time that you own the property. This doesn’t include liens that are imposed because of non-payment by you, but it does include issues that may arise from the past that were not discovered before you closed on the home. Possible hidden title issues that could arise later could be errors or omissions on the deed, mistakes in examining the records, forgery, or undisclosed heirs. Please take caution that as with any type of insurance policy, there will be exceptions and exclusions to the policy.
Before closing you will receive a Title Commitment to review. This document describes the conditions, exceptions and exclusions to the title insurance policy that will be issued. Because I am not a licensed attorney, I am not allowed to act as one, so it is suggested that you speak with a real estate attorney or the title company directly if you have any questions regarding the Title Commitment.
