Here are answers to a few commonly asked questions regarding title insurance and real estate closings:
What is Title Insurance?
As recited in Florida Statute 624.608, title insurance is insurance of owner of real property or others having an interest in real property or contractual interest derived there from, or liens or encumbrances on real property, against loss by encumbrance, or defective title, or invalidity, or adverse claim to title.
Title Insurance provides an indemnity against loss resulting from defects in title to the property and is effective for as long as the insured or the insured’s heirs hold title with a one-time premium paid at closing.
Why do I need Title Insurance?
As a buyer of real estate in today’s market, a major concern should be protecting your investment. Title insurance does just that—assuring the owner that any past title issues will not impede the enjoyment of owning his/her home. If a valid title issue should arise after closing, the title insurance company would step in and either make every effort to correct or defend you (at no personal cost) and your interest in court.
While title companies make every effort to insure that all title problems are handled prior to closing by performing an extensive search of the public records along with a detailed examination of all related documents, this does not always occur. Situations such as a missed prior mortgage, a missed heir to the property, fraud or forgery on past recorded documents can rise to the surface after closing. Having title insurance will enable you to not worry about what was missed in the past and allow you to enjoy the now and look forward to the future!
What other services do title companies provide to the consumer?
In a real estate transaction, a title company acts in several different capacities. Not only do we perform the necessary title search and title exam which determines the requirements for the issuance of title insurance, we also provide settlement services which includes coordinating and gathering all information needed for the real estate closing; staying in contact with all parties involved in the transaction i.e. buyer, seller, realtors, lender; preparing the real estate documents required for execution at closing pursuant to our title commitment and lender’s instructions; performing the physical closing; handling disbursement of the proceeds to the appropriate parties; delivering documents for recording to the county clerk’s office; warehousing the closed file; and finally, issuing the title insurance policies. Much time and effort is placed in the making of .a “smooth” real estate transaction.
How much does title insurance and other services that the title company may perform cost?
The State of Florida regulates title premiums for all title companies doing business in the State. The premium is calculated at $5.75 per $1000 of the sales price up to $100,000.00. From $100,000.00 to $1,000,000.00, add $5.00 per $1000. Once you exceed $1,000,000.00, the rate per thousand reduces significantly and calling for a title quote would be the best option to insure an accurate figure.
An example on calculating title premium based on a $250,000.00 sales price:
$100,000.00 X $5.75 = $575.00
$150,000.00 X $5.00 = $750.00
When refinancing, the lender will require a “lenders title policy” as well as several endorsements to the policy and the rates for calculation are the same as the owners policy rates. The majority of the endorsements that the lender requires a title company issue, are $25 each, however there are a couple of endorsements that require a 10% premium. For example, if the cost of title insurance is $575.00, the cost of a Florida Form 9 Endorsement would be $57.50.
An owner refinancing an existing mortgage or selling the home (within 3 years of purchase) may be eligible for a significant reduction in the title premium by providing the title company with his/her owner’s title policy. This is called a “reissue rate”. If you are uncertain as to whether you qualify, always ask your title company and they can assist you and can provide you with the cost savings to you.
Regarding the other services provided, typically, you will see a separate charge for settlement fee and search fee. Since these fees are not regulated by the State, it is best that you contact your title company to find out what their charges will be. Liberty Title strives to be very competitive in the market with our pricing so be sure to give us a call for a title quote!