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.
What Does Title Insurance Protect Against?
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:
- Tax issues
- Ownership claims
- Undisclosed heirs
- Boundary disputes
- And more!
This one-time purchase can save you from costly litigation to clear the title after you’ve already purchased the property.
The Six Title Insurance Questions You Need to Ask
In Florida, homebuyers are encouraged to buy both types of title insurance policies:
This policy is designed to specifically protect your federally-backed lender against any damages caused by defects in a title.
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.
What Coverage Do I Need?
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:
- Spousal claims
- Undisclosed heirs
- Hidden liens
It’s also possible your lender might request you take out additional insurance on the property and/or your mortgage.
Is Title Insurance Expensive?
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.
Who Pays for Title Insurance? The Seller or the Buyer?
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.
Can the Title Insurance be Transferred?
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.
How Can I Verify the Licensing of a Title Company?
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.
Learn More About Florida Title Insurance for Your Real Estate Transaction
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 Title Company. 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. We are led by Attorney Marc Brown, whose experience as a real estate litigator in South Florida makes him an invaluable asset to all we serve.
At All Florida Title, we make it our goal to keep you informed throughout the process of your real estate transaction. Have questions? Give us a call at 954-566-2200.