Title insurance Title insurance

Title Insurance For First Time Home Buyers

Nov 26 2023

Purchasing your first home is an exciting milestone, but it comes with a myriad of responsibilities and considerations. One crucial aspect that often goes overlooked is title insurance—a powerful tool designed to protect both mortgage lenders and buyers from potential financial pitfalls in real estate transactions.

Prior to a purchase and sale transaction taking place, a title agent must conduct a thorough investigation of the county’s property records. Their mission is to uncover any claims, liens, judgments, conflicts, or encumbrances that must be resolved before the transfer of title (i.e., ownership) taking place.

However, buyers need an extra layer of protection, which is where title insurance comes into play. Though optional for buyers when paying cash, most lenders make a lender’s title insurance policy a requirement for taking out a mortgage loan. This insurance policy serves to safeguard the interests of the lender’s mortgage lien position, providing a safety net in case of unforeseen issues. For buyers, title insurance protects them from adverse claims relating to their ownership rights in the property.

Title agents and insurers in Florida are subject to regulation by both federal and state governments, ensuring a certain level of reliability. Nevertheless, errors or fraudulent activities can still occur, potentially causing substantial financial harm to property owners.

Title insurance often protects against a myriad of potential issues, including:

  • Forged documents;
  • Judgments, mortgages, or other liens that were not properly filed;
  • Fraudulent sellers;
  • Missing power of attorneys in the chain of title;
  • Improperly executed deeds or satisfactions of mortgage;
  • Unknown heirs; and
  • Deeds previously signed by persons who lack legal or mental capacity.

Certain matters, such as disputes amongst, physical damage to the property, or structural issues, are not covered by title insurance. Furthermore, a title insurance policy often does not cover matters relating to zoning, environmental issues, or open/expired permits.

Cost Considerations

The cost of title insurance varies, with an average of about $1,000 for property owners, according to the National Association of Realtors. However, the specific cost depends on factors such as state regulations, the loan amount, and property values. In Florida, title insurance is a fixed amount (based on the purchase price and loan amount), as title insurance rates are determined by the State. Title insurance is a one-time fee paid at closing – it is not paid on annual basis.

What Does Title Insurance Cover?

In the event of a valid title claim, a buyer’s title insurance policy will cover their damages up to the insured amount of the policy, which is often the purchase price. The title insurance policy will also cover the cost of defense (i.e., attorney’s fees).

It’s important to note that the policy only covers issues that arise before the property transfer – title insurance does not cover matters that happen after the buyer takes ownership of the property.

Who Bears the Cost of Title Insurance?

In some counties, such as Miami-Dade, Collier, and Broward, buyers typically bear the cost of both the owner’s title insurance policy and the lender’s policy. In many other counties in Florida, however, sellers often pay for the buyer’s title insurance policy while the buyer will pay for the cost of the lender’s policy. Though there are standards that each county follows, title insurance is always a negotiable matter.

How Marina Title Can Help

Navigating the intricacies of title insurance may seem daunting, but it’s a critical step in securing your investment when buying a house. If you need guidance on the closing process (including how to take title) or would like a free title insurance quote, please reach out to us at (800) 604-1871 or via email at Info@MarinaTitle.com. We are here to assist you on your journey to Florida homeownership!

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