Buying and selling property can be an overwhelming experience. The process demands careful attention be paid to legal agreements and ensuring protection for those involved. The process climaxes when both parties sign on the dotted line, but it doesn’t always go according to plan – and that’s where a title insurance company comes in.
Title insurance is indemnity insurance that protects both lenders and homebuyers in the unfortunate instance of a defective title to a property. A title insurance company plays a key role in navigating title insurance to reduce risk and maximize protection.
Understanding the responsibilities of a title insurance company empowers you to make confident decisions when buying or selling a home.
Understanding Title Insurance
Title insurance is a precautionary step in the real estate process. The policy protects both lenders and buyers from potential financial loss in the instance of property title defects. In most instances, title insurance claims include back taxes, liens, and conflicting wills.
Title insurance involves a one-time fee for all necessary administrative tasks. The end result is a title insurance policy that covers various risks such as faulty records, incorrect ownership, and falsified documents.
There are two types of title insurance to consider;
- Lender’s title insurance protects the lender against issues with the transfer of ownership rights
- Owner’s title insurance protects the buyer against faults in the title
Florida law stipulates that all real estate transactions need a title insurance policy, either an owner’s or lender’s coverage policy. However, it doesn’t determine how much to purchase.
The policy ensures that no legal rights have been violated while creating or transferring property ownership.
Responsibilities of a Title Insurance Company
A title insurance company fulfills various roles to make sure that there are no legal hiccups and financial losses during the transfer of ownership.
Roles and responsibilities include the following;
Conduct a Title Search
A title search ensures that the seller has full rights to sell the property. The title company will search public records and assess all legal documentation to ensure that there are no ownership issues.
Documentation such as deeds, mortgage documents, tax records, marriage records, and probate records are reviewed during the title search process.
Potential obstacles that need to be finalized during the title search process include;
- Outstanding mortgages need to be closed
- Judgments or unpaid tax liens need to be closed
- Other existing liens, such as a loan to pay solar panels, need to be paid
- Unpaid Homeowners Association dues need to be settled
- Easements need to be addressed, such as permitting third-party parking on the property
- Lease agreements that implicate a third-party need to be finalized
Once all of these documents are cleared, then there can be a seamless transfer of ownership.
Insurance for the Future
The title search should raise any concerns about ownership, but it’s possible that something falls through the cracks. Title insurance offers protection against title defects that emerge down the line.
A title insurance company will guide the process and offer expert insight, ensuring that the policy is legally sound.
Supervise the Closing and Escrow Process
In some states, title insurance companies are not able to conduct a closing. However, Florida attorneys can act as title underwriters and can provide both legal representation and obtain title insurance at the closing.
The Florida Bar refers to Florida Southern that says, “It is well established that a title insurance company acting as a closing agent has the duty to supervise a closing in a ‘reasonably prudent manner’”. Also, the role includes the “duty to prepare the closing documents in accordance with the contract.”
In addition to supervising the closing, a title insurance company can manage the escrow account for the sale of the home.
Settle Future Claims
If the insurance policy is activated due to a discrepancy or title cloud over your property, then the title insurance company will provide legal representation. They will investigate any unexpected claims and assist in settling the issue.
Getting Title Insurance
The many benefits of title insurance include reduced risk in the event of a title defect, forgery, or fraud. An experienced attorney is not only familiar with the common title insurance terms and definitions, but also state requirements and specifics.
Our experienced team at Gary I. Handin, P.A also owns and operates Florida Home Title Company, who can provide all the information that you need about title insurance and title acquisition in Florida.
Contact us at 954-796-9600 to find out more or contact us online.