Title Insurance Vital to Protecting Homebuyers – Part II
Unlike most other types of insurance, you pay a one-time premium at the time of your home purchase for coverage that continues as long as you or your heirs own the property. Depending on where you live, the cost of an owner’s policy is marginal when a lender’s policy is also being issued. This “simultaneous issue” discount means you do not pay full premium for owner’s and lender’s policies. You may even split settlement costs with the seller for the lender or owner’s policy. Depending on the state, rates are set by the state’s Department of Insurance or by the companies themselves. Consumers should ask their local title company how rates are determined and what services are included in the rate for where they live.
An example of how an owner’s policy protects homeowners occurred in Texas earlier this year. A homebuilder was charged with defrauding first-time homebuyers by selling houses that were encumbered by undisclosed liens. When the builder subsequently failed to pay the debt, the creditors who were owed money started foreclosure proceedings and filed lawsuits against the home buyers. The developer sold the properties without home buyers realizing that their new houses were subject to undisclosed liens because they did not purchase title insurance. An owner’s policy would have paid to settle the dispute and covered any associated legal fees.
In all transactions, a search of public land records affecting the property is conducted to make sure a homeowner has clear title to their property. The title agent will scrutinize prior deeds or mortgages, divorce decrees, court judgments, delinquent taxes and child and spousal support payments, vesting, covenants, conditions and restrictions, general encumbrances, and utility or other kinds of easements. A history of ownership of the property is created, called an abstract, and steps may be taken to cure title issues that are discovered. This may include correcting recording and indexing errors in the public record, correcting misspelled names or incorrect legal descriptions. According to the American Land Title Association, the title insurance industry cures defects in public records in more than 35 percent of all transactions.
Some examples of documents that can present unexpected title issues include:
- Deeds, wills and trusts that contain improper wording or incorrect names;
- Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes;
- Easements that allow construction of a road or utility line;
- Pending legal action against the property that could affect a purchaser; or
- Incorrect notary acknowledgements.
Some examples of issues which can present title claims under your policy include:
- A forged signature on the deed, which would mean no transfer of ownership to you;
- An unknown heir of a previous owner who is claiming ownership of the property;
- Instruments executed under an expired or a fabricated power of attorney; or
- Mistakes in the public records.
The American Land Title Association helps educate consumers about title insurance so that they can better understand their choices and make informed decisions. Homebuyers, regulators and legislators are encouraged to check out the website, www.homeclosing101.org, to learn more about title insurance and the closing process.
Title Junction is a full service real estate title company serving the area of Fort Myers, Cape Coral and the entire state of Florida since 2005. The company handles a number of real estate title services for both commercial and residential properties. Employees of Title Junction can also act as a witness in courtesy closings as well as an escrow agent or a notary public. Please contact Title Junction, LLC for further information @ 239-415-6574 or www.title-junction.com.
Posted on February 8, 2013, in Title and tagged American Land Title Association, Cape Coral, Child Support, Closing, Conditions and Restrictions, Contruction, Court Judgments, Covenants, Creditors, Deed, Delinquent Taxes, Department of Insurance, Divorce Decrees, Easements, Fabricated Power of Attorney, Foreclosure, Forged Signature, Fort Myers, General Encumbrances, Jennifer Ferri, Legislators, Lender's Policy, Mortgages, Notary, Owner's Policy, Property Guiding, Public Records, Regulators, Simultaneous Issue Discount, Spousal Support, SWFL Real Estate, Texas, Title Insurance, Title Junction, Title Work, Trusts, Undisclosed Liens, Vesting, Wills, www.homeclosing101.org. Bookmark the permalink. Leave a comment.