Every once in a while, luckily not often, a buyer will buy a piece of real estate without title insurance. This is, in my opinion, a very bad choice. On the low end a house in Key West will cost $500,000 and go up to over $5,000,000. On a $500,000 house the title insurance will cost $2,575. Isn't it worth $2,575 to protect your $500,000 investment?
When you are buying real estate — a house, land or commercial property — in Florida, you buy everything that comes with it, including the building structure or house, improvements such as a fence, additions, landscaping, and even the well and sewer system. Similarly, when you buy a condominium, you buy into the interest in the building and you have a share in the common areas, along with owning your own particular unit. When a seller is transferring ownership of property to another person, the seller needs to ensure that the buyer is getting the property free of encumbrances and liens. In other words, the buyer expects to receive clear title to the property he or she is purchasing. Trained and experienced title insurance agents perform title searches, which will reveal problems that the buyer will need to be made aware of. A title search can show a number of title defects and liens, as well as other encumbrances and restrictions, which include (but not limited to) unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.
How to Ensure Clean Title
As part of the closing process, the buyer will have a property title search done to ensure the title is clear. This is done by a certified Florida title company, such as Title Partners of South Florida. Buyers should purchase insurance to make sure that any omissions or errors made in the title search are protected after closing. This allows a property buyer to feel confident that after he or she is the legal owner of the property, they have marketable property title. Title insurance protects buyers from titles contested based upon past rights and claims asserted by others. These types of claims can cause buyers to lose money or even worse… lose their home.
An Overview of Title Insurance
Title insurance is an insurance policy that is purchased for real estate through a title insurance company. Title insurance is your policy of protection against loss if any of the problems mentioned above — even a “hidden hazard” —results in a claim against your ownership. This insurance protects the owners of homes and real property, and it also offers protection for mortgage lenders who are making the loans from any losses or claims resulting from title issues. The costs of purchasing such a policy can be rolled into the transaction’s closing costs. Anyone looking to protect their property title should obtain title quotes through a licensed title insurance company.
Title Problems
There are a number of different issues that can come up during a title search performed by a title insurance company. These issues include defective or missing documents, claims by the government or creditors, outstanding tax bills or construction claims. Some of these issues can cause the title to be invalid.
Examples of issues your title agent may find during a property title search include:
- A homeowner adding on home improvements, such as a pool, and failing to pay the contractor. The contractor can then file a claim against the property, and that claim must be paid before the lien is released.
- A homeowner does not pay his real estate taxes, and the taxing authority files a lien on the home. The taxes must be paid before the lien is released.
- The previous owner could have incorrectly stated his or her marital status, resulting in a possible claim by a legal spouse.
- If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense — and pay all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.
- At Title Partners of South Florida, we have an experienced team of professionals who have been serving the state of Florida for over 22 years. We understand this purchase is one of the biggest of your life, and we’re here to ensure clear and marketable title and help make your home buying and real estate closing experience as smooth as possible!
Title insurance is like medical insurance or automobile insurance. We buy it hoping we never need to use it but it sure is great to have when you do need it.
Gary
Gary McAdams, PA
Realtor and Notary Public
Barbara Anderson Realty
Key West, Florida
