Title Insurance FAQ: Get the Answers

Buying a home is a very exciting time in your life. With all of the activity and decisions, it is important to have the right information to protect your rights and finances. Here is a helpful guide to what you need to know about title insurance for your home buying process:

What Is Title Insurance?

Title insurance is a type of insurance that covers the search of the property documentation and records to make sure the title is valid and contains no errors. This can include such things as outstanding liens on the property, clerical errors, outstanding property taxes, undisclosed heirs, or similar issues that can declare the title invalid or defective.

It also includes the underwriting of the insurance policy. Homebuyers will typically need two separate policies — one that represents your interests, the Owner’s Policy, and another that safeguards the financial institution, the Lender’s Policy.

Why Do I Need Title Insurance?

Financial protection. If you close on a home, including signing on the dotted line for a large loan, you want to make sure that you are protected. Even with the most thorough and intensive search, occasionally a hidden issue will surface. You need it to cover associated costs if a claim on the deed arises regarding the ownership of the property.

What Does Title Insurance Cover?

Standard protection for a homebuyer covers quite a comprehensive set of potential risks. Policies typically include the following:

• Deed is not properly recorded
• Impersonation and forgery
• Lack of legal authority or competency
• Deed doesn’t include a necessary party (business partner, heir, spouse, co-owner, corporate officer)
• Undisclosed (recorded) lien, mortgage, use restriction, or easement
• Inaccurate legal descriptions or erroneous legal descriptions

Inaccurate legal descriptions or erroneous legal descriptions

Buying or selling a home? Questions about title insurance?

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How Much Does Title Insurance Cost?

Good news! Unlike most insurance, title insurance is a one-time expense. The premium is tied directly to your home’s value and usually costs less than the annual charges for your car insurance. It is paid when you purchase your home and lasts for the entire duration that either you or your heirs own the property.

If you are purchasing insurance for a property that is a new construction, you may even be entitled to a discount. Also, if the property has been issued a recent policy prior to your purchase, you may be able to qualify for a “reissue credit.” This credit has some restrictions including a need for verification that there have been no improvements on the property and that the previous issue was less than three years ago. Make sure to contact a professional to figure out if you may qualify for any discounts on title insurance.

Are There Price Regulations on Title Insurance?

The Florida Office of Insurance Regulation sets the rates for title insurance for Florida property buyers and sellers. The overall fees typically include title service charges including examination fees, closing costs, the title search, and the “promulgated rate.” This rate covers the administration costs for underwriters to issue the policy, as well as taking into account underlying risks. Many states across the country have regulatory authorities that set the rates for the title insurance.

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When Should I Start Looking for Title Insurance?

The sooner, the better. It takes time to perform a comprehensive title search and to complete the underwriting. Once you make the final decision and you and the seller sign the earnest money contract, contact us and we can start the process. You want to have plenty of time prior to closing day to get all the steps completed prior to the big day — the closing.

What Else Do I Need To Know?

When it comes to buying a home, information and preparation are your best friends. Once you move forward with title insurance process, get clarity on other important issues such as:

What Should I Expect To Happen on Closing Day?

The escrow officer will go over all the documentation for the home purchase with you including loan documents, terms of the sale, the escrow statement, and inspection reports.

What Do I Need To Bring To Closing?

First and foremost, make sure you have a valid photo ID such as a passport, driver’s license, or military ID. Also, check the amount given to you by your agent for your title insurance. This should be in the form of a cashier’s check made out to the title company.

How Long Does the Closing Usually Take?

Most closings do not take very long at all. All the documentation has already been prepared, and most homeowners can get through the paperwork in about 30-45 minutes, depending on how many questions you ask. By the time you get to closing day, the important decisions have already been made and you will soon be stepping over the threshold of your new home.

The Takeaway

Title insurance is a crucial part of the home buying process. It serves to make sure you are well protected from issues that may come up with the deed to your home. If something goes wrong, you need to have the assurance that your financial future is intact.

Having a dedicated and highly qualified team on your side will give you the confidence you need to move through it all smoothly and with no worries.

Bay National Title Company offers unparalleled services with accuracy and integrity — helping home buyers and exceeding expectations across the country.

For more information on our comprehensive services, please click here.