Posted By Victoria Boss Vero Beach Realtor || 3-Jun-2014
Title insurance is a form of indemnity insurance which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. It protects the property against loss due to title defects, liens or other matters. It serves to safeguard the interest of the owner or the lender in real property.
The title insurance company issues a title insurance policy and affords protection to the property. The company ensures to identify all existing liens on the property and shield the property against it. The title insurance affords protection from liens, fraud, foreclosures, mistakes in recording legal documents, forged or misinterpreted deeds, releases or wills, untrue impersonation, missing spouses, deeds by minors, deeds by persons of unsound mind, deeds by persons allegedly single but legally married. The seller and the buyer both are required to obtain title insurance. The seller needs the title insurance to prove that the property is free of any title defects. The buyer needs title insurance to safeguard from being liable to property issues in case of improper title check, mistakes in public records etc.
The title check/search reveals whether the property is free of all liens and encumbrances. It assures the buyer that the seller solely enjoys the ownership of the property and pursuant to sale of the property; the buyer will obtain the sole rights. The property can be sold to a series of buyers transferring ownership from one buyer to the other. This is said to be a chain of title. The chain provides the history of ownership of the property.
A commitment is a report which states whether the property possesses other claims with regard to ownership. The report elucidates the status of the property whether free from claims or not. This report is useful for providing the property as a security while availing mortgage loans. The property should be provided fresh title insurance in case of a refinance. Insurance is recommended for refinancing to prove that the property is free of any liens, claims or encumbrances. This is beneficial while dealing with mortgage transactions.
An escrow account is created under the contractual provisions between the buyer and the seller. This arrangement entrusts an independent third party who operates the account for the transacting parties. Such third party receives and pays money as agreed between the transacting parties. It is convenient for the parties to deposit the amount in an escrow account until the completion of the transaction. Hidden defects in the title can make void the transaction. Such defects that do not arise even after thorough title search are troublesome. The defects like pending litigation with property as a subject matter or improper estate proceedings can expose the owner of the property to various troubles. The insurance policy should provide protection from any previous title defects in order to avoid the adverse consequences of a defective title. The fees incurred by the insurance companies are more or less uniform. However, fees with respect to searches, administration etc may differ. In Florida the title insurance costs are reasonable.
The documents required for completion of the transaction for both buyer and the seller are mentioned hereunder:
Buyer’s copy of purchase agreement
- Cashier’s checks to make all payments
- Proof of purchase of insurance for fire, casualty, etc.
- Invoices for any unpaid taxes, utilities, or other bills
- Photo ID
- Seller’s copy of purchase agreement
- Invoices for any unpaid taxes, utilities, and assessments
- Receipts for last payment of interest on mortgages
- Bill of sale for personal property covered by the purchase agreement
- Any unrecorded instruments that affect the title
- Proof of satisfaction of any mechanics’ liens, chattel mortgages, judgments, or mortgages that were paid prior to the closing
- Photo ID