If you plan to purchase a home or commercial property, it’s important for you to understand what title insurance is and why it plays such an essential role in making the purchase possible.
The buyer will want to purchase the property free and clear of any defects in the title, such as a break in the chain of recorded ownership, a contractor’s lien or a potential claim from someone who purports to be the true owner. You probably don’t want to purchase property that you might lose because your seller didn’t have clear title to it and you likely won’t be able to get a loan to purchase a property where title is disputed.
Title insurance is a means of protecting you and your lender from title defects. Obtaining title insurance safeguards the amount of the purchase price in case your ownership is challenged. If you must go into court to defend your title against any type of defect covered by the policy, the title insurance company will hire an attorney to represent you and pay your legal costs.
The first step to getting title insurance is to hire a title agent. Your realtor may recommend one or more title agencies, but you’re under no obligation to hire any of them. You should make sure your title agent is licensed in the State of Florida, has a good reputation and is willing to answer any questions you have about your title insurance policy.
The title agent will look for any defects on your title by collecting any relevant public records filed in the county where the property you intend to purchase is located. From there, the agent creates an abstract of title by compiling and summarizing those records. The title agent will then arrange for you to purchase a title insurance policy covering both you and the lender. In certain transactions, the title agent will also conduct the closing.
You pay only a single premium on the title insurance policy at the time you purchase it, but it will remain in effect as long as you and your heirs own the property. You will need to wait until the deed is recorded before you receive the actual policy, but you will receive a title commitment, which binds the title insurer to issue the policy, at the closing. The commitment will describe the policy, including what kinds of title defects it doesn’t cover.
As both a real estate attorney and title agent for several major underwriters licensed in the State of Florida, Norma Echarte provides comprehensive title services and real estate representation to Florida clients. If you require assistance with title insurance or any other aspect of a real estate transaction, please call Norma Echarte & Associates at 305-501-2844 or contact us online. Our office is in Miami.