Understanding Title Insurance: What Buyers Need to Know

If you are buying a property in Florida, you may have already found the perfect fit, negotiated the contract terms, and signed the contract. But before you can celebrate, you have to go through the closing process, which involves a lot of paperwork, legal requirements, and potential risks. At this critical stage, having a reliable title and escrow company by your side is crucial to protect your interests and rights. 

This is where Marina Title, steered by the experienced attorney Jennie G. Farshchian, becomes your ally. With over a decade of expertise in residential and commercial title matters and thousands of successful closing transactions under our belt, we understand the intricacies of the closing process.

What is Title Insurance?

Let’s break down what title insurance means. Title insurance is a form of indemnity insurance, protecting you from financial setbacks arising from title claims, such as unresolved liens or judgments, mistakes in the chain of title, or prior forgeries. One type of title insurance is a lender’s title insurance policy, which the borrower purchases to protect the lender’s interest in their mortgage lien. The other type is owner’s title insurance, which is for the benefit of the new owner and protects the buyer’s ownership stake in the property.

Understanding Title Insurance

Title insurance is a type of indemnity insurance that protects the insured from financial loss when there are claims filed against the title of the property, such as prior liens, back taxes, or missing documents in the chain of title.

The two types of title insurance are lender’s title insurance and owner’s title insurance.

• Lender’s title insurance: This type of insurance is purchased by the borrower to protect the lender from claims that threaten the lender’s mortgage lien position. Lenders almost always require the borrower to buy lender’s title insurance.
  
• Owner’s title insurance: An owner’s policy is purchased by the seller or buyer (depending on the county) to protect the buyer against defects in the title.

In sum, title insurance protects lenders and homebuyers from financial loss due to defects relating to a property’s title, such as outstanding lawsuits and liens.

Why is Title Insurance so Important for Home Buyers?

During the home buying process, a title company will check the home’s ownership history to determine whether there are any lien or title issues. Essentially, the company is searching and examining the title to the home to confirm whether it has clear and marketable title so that there will not be any title issues for the new buyer down the line. 

However, an issue might arise years later because of incorrectly recorded documents, errors in ownership history, outstanding legal matters, or any other events that even a thorough title search and examination may not reveal. That is why it is crucial to secure title insurance when you are buying a home.

What does Title Insurance Cover?

Title insurance safeguards against title matters that were not uncovered at closing, ensuring your home purchase is secure. An owner’s title insurance policy provides coverage for a host of matters, including but not limited to the following:

• Conflicting claims to ownership
• Mistakes on prior deeds
• Missing heirs
• Incorrect powers of attorney
• Conflicting Wills
• Forged or fraudulent documents
• Judgments or liens that were improperly filed by the clerk
• Claims from an ex-spouse who did not sign off on the sale

What Will Happen if I Don’t Purchase Title Insurance?

Though you may not need to use it, having title insurance protects you from taking on significant risks when you purchase a home. Here are a few examples of how title insurance can protect you:

• The seller may have claimed he doesn’t have a spouse or is divorced when he or she was in fact separated, meaning that the title conveyance was not complete.
  
• The seller or a prior owner may have inherited the home under the terms of an outdated Will, but it turns out there is a more recent one that gave the home to someone else, implying that the seller is not the rightful owner.
  
• A judgment or lien was misfiled by the county clerk, resulting in it not showing up in a title search.

Title insurance protects you in an amount equal to the purchase price of the property. Opting out of an owner’s title insurance policy means that if there is a covered title defect, you will have to pay out of pocket to resolve it. Furthermore, title insurance covers the cost of paying an attorney. If you forgo title insurance, you may also have to pay attorney’s fees out of pocket. These are just some of the benefits of title insurance. 

Do You Want to Protect Your Property’s Title? Contact Marina Title Today!

Do not expose your ownership interest to unnecessary risk – get title insurance today. Contact us by calling (800) 604-1871 or email us at [email protected] for a free closing cost estimate and consultation on the title and closing process in Florida. We provide title, escrow and closing services throughout the State of Florida.