What is a Title?
A title is the foundation of property ownership. It is the owner’s right to possess and use that property within certain limitations.
What is Title Insurance?
Title Insurance is a contract to indemnify against losses arising from defects in the title to real property. It affords protection against matters that may or may not be accurately reflected in the public records, including but not limited to fraud, forgery, incompetence, missing heirs, taxes, easements, restrictions, lawsuits, clerk indexing, and judgments, which adversely affect a new owner’s interest in the real property purchased.
Title Insurance will guarantee a policy owner against loss due to title defects not specifically identified in the policy. It also covers all expenses in defense of any lawsuit challenging your ownership of the real property.
Unlike other types of insurance (i.e., automobile, health, homeowners) when you purchase a Title Insurance policy you pay a single, one-time premium and your policy remains in effect until the real property is sold or transferred.
What is a title search?
A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes and many other documents. The purpose of the search is to verify the seller’s ability and right to transfer ownership and to discover any claims, defects and other encumbrances on the property.
How does title insurance protect my investment?
If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense and pay all court costs and related fees.
Are there problems that a title search cannot reveal?
Yes. There are some hidden hazards that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his/her marital status, resulting in a possible claim by his legal spouse. Other hidden hazards include fraud, forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the public records. These defects can arise after you’ve purchased your home and jeopardize your right to ownership.
How much could I lose if a claim is filed against my property?
That depends on the claim. In an extreme case, you could lose your entire home and property and still be liable to pay off the balance of your mortgage. Most claims aren’t that dramatic, but even the smallest claim can cost you money, time and aggravation and you’ll still have to pay costs for a legal defense.
The owner of the property has a deed. Isn’t that proof of ownership?
Not necessarily. A deed is just a document by which the right of ownership in land is transferred, whatever that right may be. It is not proof of ownership, and it doesn’t do away with rights others may have in the property. In addition, a deed won’t show you liens or claims that may be outstanding against the title.
What about an attorney’s opinion?
An attorney’s opinion is based on a search of the public records. So, once again, even the most exhaustive search of these records may not reveal everything. It’s also important to remember that an attorney is not liable if you should suffer loss because of hidden hazards in the title.
The previous owner had a search six months ago. Why do I need another one?
Because the owner could, in a very short time, do many things to encumber the title. For example, he could grant easements or construct improvements which encroach on adjacent property. He could get married or divorced or have a lien filed against the property. It is necessary to conduct an up-to-date title search to uncover any such problems.
The builder of my home has title insurance. Why do I need it when I purchased the land from him?
A title policy insuring the builder does not protect you. Many things could have happened to the land since the builder’s policy was issued. Liens, judgments and unpaid taxes for which prior owners were responsible may be disclosed after you purchase the property, causing you aggravation and costing you money.
Are there different types of title insurance policies?
Yes. Basically there are two different types of policies, a lender’s policy and an owner’s policy. The lender’s policy protects the lender’s interest in the property as security for the outstanding balance due under the buyer’s mortgage. The owner’s policy safeguards the buyer’s investment or equity in the property up to the face amount of the policy.
Where can I get title insurance?
From Princeton Title & Escrow, LLC, who serves as an agent for several national title insurance underwriters. When selecting a title insurer, it is important that you look for a company with expertise and experience, as well as the financial strength to protect you should a claim arise.
Does a Seller have to make all the repairs listed under the Buyer’s Inspection Report?
The terms of the Contract will provide the answer. If the Seller has contracted to sell the property “As-ls”, then the answer is probably no. The Buyer should employ a licensed inspection company to inspect the property and prepare a written inspection report for the parties, and such report must be delivered to the Seller within the time frame set forth in the Contract. Once the Seller receives the inspection report, they are customarily obligated to make non-cosmetic repairs as required by the terms of the Contract. Also, depending on the terms of the Contract, the Seller may only have to make repairs up to a specific monetary repair limit and, if the repairs exceed that amount, the Contract will control the parties’ rights.
What happens if the parties are not able to close by the closing date in the contract?
Most Florida contracts include a “time is of the essence” provision. Therefore, the Contract’s closing date is a firm one. Of course, there are other contract terms that may affect the occurrence and timing of the closing date. The parties can also negotiate an extension of the closing date set forth in the Contract. Such negotiated extension must be reduced to writing.
What exactly happens at closing?
Closing is the process in which title is actually transferred from Seller to Buyer. Seller executes all documents transferring title to the property to Buyer and Buyer signs loan documents, if applicable. Parties should always bring photo identification with them to the closing. Seller must bring all keys, garage door openers and other pertinent information for the Buyer. Buyer must wire transfer the cash-to-close funds to the title company prior to closing.
How does a closing take place if any of the parties are out of town on the closing date?
Closing real estate transactions can be done either in person or by mail away. If either the Buyer or Seller will be out of town on the date of closing, they will need to notify the title company as soon as possible so they can coordinate (i) a pre-closing signing, or (ii) a mail away of the closing documents (including the loan documents).
Who pays what at closing?
The Contract will control who pays costs at closing. However, typically, Buyer is responsible for all costs related to the Buyer’s loan, including all bank fees, escrows, if applicable, title insurance premiums relative to the Lender’s title insurance policy, the survey, recording fees for the mortgage and taxes on the mortgage/note, and Buyer’s attorneys’ fees. Seller is generally responsible for realtor commissions, title searches, transfer taxes on the deed, and Seller’s attorneys’ fees. The party responsible for the cost of the title premiums associated with the Buyer’s owner’s title insurance policy is determined by the county in which the property is located.
When will I know exactly how much money I need to bring/send to closing?
Approximately a week before closing we should be in receipt of all documents we need in order to prepare an accurate closing statement and the closing documents. We understand you may need to make financial arrangements prior to that, so if you need an estimated amount before that time, we will be happy to help you calculate an approximate you can work with.
How can I take title to my new home?
Joint Tenants with Rights of Survivorship: The individuals share equal ownership of the property and have the equal, undivided right to keep or dispose of the property. The right provides that upon the passing of one of the individuals, his or her interest immediately ceases to exist and the remaining joint tenants own the entire property. However, a creditor of one of the individuals may attach the tenant’s property to satisfy a debt, obligation or judgment of that individual.
Tenants in Common: The individuals share a specific ownership of the property. Tenants in common may hold unequal interests. Each co-tenant has an interest in the property and is free to transfer that interest during life or through a will. Should one of the tenants in common pass away, there must be a probate (court supervised administration) of the estate of the deceased to transfer the interest (ownership) of that individual.
Husband and Wife: This is a common type of ownership that automatically creates a “Tenancy by Entireties” between spouses, similar to Rights of Survivorship but with added creditor protection. One tenant cannot convey his or her interest on his or her own, unlike with the other tenancies. Upon the death of one spouse, his or her interest automatically passes to the other spouse, as with joint tenancy. However, the creditors of one spouse cannot attach the property or force its sale to recover debts unless both spouses consent.
Revocable, Irrevocable or Land Trust: Seek advice from a licensed attorney before selecting this method of titling your home as there may be tax implications and other estate planning issues that should be considered.
Legal Entity: A corporation or limited liability company can be formed to take title to the property. Note, however, there may be restrictions in either the community or condominium building where the property is located that prohibit title to be taken in the name of an entity. Further, taking title in this fashion may also affect one’s ability to secure the Florida homestead exemption.