When the word “title” is used, it refers to identifying the owner. For real estate, the title document is a Deed. It is the foundation of who owns the real estate.
What Does Title Insurance Cover? Title insurance protects the Buyer of real estate from losses, and legal fees, the Buyer could suffer in the event there is a ‘defect in title’. Often, these defects in title are not discovered until years after the Closing on the purchase by the Buyer.
What ‘Defects in Title’ can Occur? Often occurring by accident, and sometimes due to improper actions by others, title defects can include:
– Fraudulent Sellers who pretend to be the rightful Owner
- Errors in the recording of legal documents from the Closing such as a Deed
- Mistake by the County Recorder in recording a Mortgage or Satisfaction
- Unpaid taxes or assessments
- Unreleased mortgages
- Unpaid judgments or liens
- Lack of mental capacity of the Seller
- Improper execution of the Closing documents
- Forgeries or fraud in the Closing transaction
- Undisclosed or missing heirs of a deceased Seller
How Much Does Title Insurance Cost? Title Insurance cost is paid for via a one-time premium that is paid at the time of the Closing. The Title Agent collects the premium at the Closing and issues the Title Policy to the Buyer. The premium amount is a set by Florida Statute 627.7825 and the Florida Administrative Code, Chapter 4-186, and is based on the Purchase Price. The title insurance rates are:
$5.75 per $1,000 for the first $100,000;
then, $5.00 per $1,000 should be added over $100,000 up to $1 million;
$2.50 per $1,000 over $1 million up to $5 million;
$2.25 per $1,000 over $5 million up to $10 million;
and $2.00 per $1,000 over $10 million coverage.
What is Owner’s Title Insurance? An Owner’s Title Policy is designed to protect Buyers from covered title defects that existed prior to the issue date of the policy. If a valid claim is filed, the Buyer’s Owner’s Policy, subject to its terms and conditions, will cover financial loss up to the face amount of your policy.
What is Lender’s Title Insurance? A Lender’s Policy does not provide coverage to the Buyer. A Lender’s Policy ensures that the Buyer’s lender has a valid, enforceable lien on the Buyer’s property. Most lenders require borrowers/Buyers at their Closing to purchase this type of insurance policy to protect the Lender’s investment. If a Buyer is paying cash, a title policy may not be required, however, it is highly recommended for many reasons.
Is Title Insurance Required? Title Insurance is generally not required, at least not by Florida law. However, when a Lender is involved, the Lender will require a Title Insurance policy be acquired. Moreover, a Lender will require that an Owner’s Policy as well as a Lender’s Policy be purchased for the Closing. When a Buyer is paying cash for the purchase, it may be optional for title insurance to be purchased. However, it is highly recommended for many reasons. The Title Insurance protects against Defects in Title that do occur throughout Florida. They occur regardless of how thorough the Title Agent or anyone else involved in the Closing transaction may have investigated the Title. Moreover, the Title Insurance not only covers the loss but also pays for legal fees for the Buyer to defend or prosecute a title claim.