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No matter what it is covering, insurance serves a vital purpose in our lives. From protecting your family from natural disasters to insuring against defects in a property title, these policies ensure your investments are secure from financial loss.
If you are questioning the need for title insurance or are currently shopping around to purchase a policy for a home sale, there are several questions you should be asking.
In short, title insurance protects buyers from the financial damages caused by defective titles. The types of issues that could cost you or the buyer a ton of money to correct includes:
This one-time purchase can save you from costly litigation to clear the title after you’ve already purchased the property.
In Florida, homebuyers are encouraged to buy both types of title insurance policies:
Lender
This policy is designed to specifically protect your federally-backed lender against any damages caused by defects in a title.
Owner
Title insurance policies for owners (the buyer) are intended to shield the new homeowner from parties claiming to have a legal interest in the property before you purchase it. For example, a relative was named an inheritor, but no one notified them of this fact, and now they want their house.
Most loan companies will require buyers to get a lender policy, or the home cannot be closed. This protects the financial investment they have made in your property if a party has a claim against the residence dating before your purchase.
In addition to lender and owner title insurance policies, there are additional coverages you could add on for contingencies that might arise after your purchase, including:
It’s also possible your lender might request you take out additional insurance on the property and/or your mortgage.
How much your title insurance policy costs depends on the value of the home you’re purchasing or the mortgage value if refinancing. The good news is that the Florida Department of Finance regulates the formula used to calculate your policy’s price.
Generally, the seller covers the cost of title insurance in Florida, but they can also choose the title company. However, in some counties, this falls on the home buyer. Regardless of who is responsible for purchasing the policy, the costs can be negotiated into the sales contract. To determine who should be choosing and paying for this expense, reach out to a reputable title company in your area to find out.
No. When a property changes ownership, the policy can’t be transferred to the new owner. Normally, these policies will terminate once the legal title has changed.
It’s important to ensure that any title insurance you purchase is from a licensed title company. You can always ask these organizations for proof of their state licensing or verify their legitimacy online using the Florida Department of Financial Services Licensee Search Tool.
At the end of the day, title insurance should not be treated like an unnecessary expense you’re being forced into but an investment in the financial security of your real estate purchase.
Whether you are a buyer, a seller or a realtor, title insurance in Florida ensures that future losses due to unforeseen title defects are mitigated. If you are unsure of the type of policy you need or coverages you should include, speak with the knowledgeable team of All Florida Real Estate Lawyers. Our years of experience helping families and individuals navigate the complexities of the closing process has given us unmatched insight into the unexpected troubles that can arise in home buying.
At All Florida Real Estate Lawyers, we make it our goal to keep you informed throughout the process of your real estate transaction. Have questions? Give us a call.
