Purchasing a home is a big step for many Americans, and likely the most expensive purchase they will ever make. Title insurance enables homeowners to enjoy their property knowing that they are protected should their ownership ever come under scrutiny.
What is title insurance?
When you own a property, you have “title” to the property. Title insurance protects you should anyone ever question your ownership or use of the property. It acts retroactively in that it protects against possible defects that arise prior to you purchasing the property rather than defects that occur after you purchase the property.
One of the first steps taken by Town Square Title is to order a title search prior to closing. A title search gathers all information about the property available from public records, and if any encumbrances are found on the title they can be addressed before the closing takes place.
Examples of these types of title issues include construction liens, delinquent property taxes, and judgment liens.
How does title insurance work?
Obtaining an owner’s title insurance policy upon the purchase of your real property is an important part of protecting your rights as a real estate owner.
If you do not obtain an owner’s title insurance policy you may be subject to certain risks such as:
- All matters set forth in the Public Records
- Unsatisfied claims not shown on the Public Records
- Boundary line and encroachment disputes
- Clerical errors in recording legal instruments
- Encumbrances of unrelated lenders whose mortgage uses an incorrect legal description
What is the difference between an owner’s title insurance policy and a lender’s title insurance policy?
If you are obtaining a mortgage in connection with your purchase, the lender will require a title insurance policy to protect their interests. This DOES NOT protect your interest as an owner of the real estate. Also, remember that due to the structure of title insurance rates, when your lender obtains title insurance the additional cost to obtain both owner’s and lender’s title insurance coverage is significantly reduced.
We highly recommend that you obtain an owner’s title insurance policy.
How much does title insurance cost?
When purchasing a home in the state of Florida, the cost of title insurance is $5.75 per thousand dollars up to $100,000.00, so the cost for title insurance on a $100,000 home is $575.00. For homes where the price exceeds $100,000, the cost is $5.00 per thousand from $100,001 to $1,000,000.
In other words, if you were to purchase a home for $350,000 the title insurance would cost $1,825. The good news about title insurance is that you only have to pay for it once at the time of purchase. There are no future premiums or obligations. (Note that refinancing the loan can be an exception to this rule.)