12 FAQ’s
For most of us, buying a home is the most significant single investment ever. Most homeowners protect their investments by insuring them against fire, theft, and weather damage. But, there is another hazard that can pose an even greater risk to home ownership.
Defects in the title to your property.
Unknown or hidden claims, defects, and other rights or burdens can cause you to lose part or all of the investment in your home. Fortunately, there is a way to protect your investment. It comes in the form of title insurance.
To help you with your concerns and thoughts about title insurance, here is a list of frequently asked questions about the Real Estate Title Insurance industry.
If there are any questions or concerns we have not covered, please get in touch with us. We are happy to answer all your questions and concerns.
Why is title insurance necessary?
No other property has a valuable life that compares with the life of the land. Owners of goods may change their location at will, but the land is stationary. Because land is permanent, various rights in land may have been acquired by others by the time you come into possession. So to transfer a clear title to a piece of land, it is first necessary to determine whether any rights are outstanding. Owner’s title insurance protects you from financial loss caused by title problems. Therefore the Title Insurer, without expense to you, will defend you against any attack on the title to your property as insured.2.
What is a title?
A title is the foundation of property ownership. It is the owner’s right to possess and use the property.3.
Why is transferring the title to real estate different from transferring the title to other items, such as a car?
Because land is permanent and can have many owners over the years, various rights in land may have been acquired by others (such as mineral, air, or utility rights) by the time you come into possession, even if the land has never been built upon. To transfer a clear title to a piece of land, it is first necessary to determine whether any rights are outstanding.4.
What is a title search?
A title search is a detailed examination of the historical records of a piece of property. These include deeds, court records, property and name indexes, and other documents. A title search aims to verify the seller’s right to transfer ownership and discover any claims, defects, and other rights or burdens on the property.5.
What kinds of problems can a title search reveal?
A title search can show several title defects, liens, and other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller, and restrictions limiting land use.6.
Are there any problems that a title search cannot reveal?
Yes, there are some “hidden hazards” that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his marital status, resulting in a possible claim by his legal spouse. Other “hidden hazards’ include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names, or clerical errors in the records. These defects can arise after you’ve purchased your home and jeopardize your right to ownership.7.
How does title insurance protect me?
The title insurer will, at no expense to you, defend against the following possible attacks on your right of ownership:
- Forgery
- Fraud
- Loss because of impersonation
- Indexing or filing errors in the clerk’s office
- Guardianship and probate issues arising from heirs/devisee’s of former owners
- Boundary disputes (Surveyor’s errors)
- Title Examiners’ Oversights
8.
What is Real Estate Title Insurance?
Real Estate Title Insurance is your protection policy against loss if any problems result in a claim against your right to ownership – even a “hidden hazard.”9.
How long does my coverage last?
Premiums for most other forms of insurance are recurring and must be paid for periodically. Title insurance has only ONE premium, paid at the time of settlement. That single premium will protect you for as long as you or your heirs retain an interest in the property and, in some cases, even beyond.10.
What are the costs involved?
Closing costs are the expenses that buyers and sellers typically incur to complete a transaction in the real estate transfer of ownership. These costs are in addition to the property’s price and are calculated as part of your final closing figures. Closing costs are customarily, but not always, divided between the buyer and seller according to the pre-printed paragraphs within the Contract for Purchase and Sale.
Charges vary in different sections of the country. Still, the cost of title insurance (including the search, examination, and related services) generally amounts to about one percent (1%) or less of the cost of the property.
11.
FHA and VA Loan Closings
FHA and VA do not allow the buyer to pay certain items in connection with the loan. The seller must pay the buyer some of these “unallowable” closing costs. Some of these fees may include:
A reduced title rate, called a “reissue rate,” is provided on refinance loans for borrowers who provide a copy of their Owner’s Policy of Title Insurance. This reissue rate is also given to a seller if they have owned their home for less than three years and provide their Owner’s Policy of Title Insurance. The reissue rate is based on the original owner and the new title policies.
A title company’s role in a real estate transaction is critical to ensuring a smooth and secure transfer of property ownership. They act as a neutral third party and play several essential roles. Here are the key responsibilities of a title company:
Title Search: The title company comprehensively searches public records to determine the property’s ownership history and any potential liens, judgments, or encumbrances that may affect the title.
Title Examination: After the title search, the title company examines the findings to verify the property’s title status and identify any title defects or issues that need resolution before the property can be transferred.
Title Insurance: The title company provides policies to protect both the buyer and the lender from financial losses due to undiscovered title defects or ownership disputes.
Escrow Services: Title companies often act as escrow agents, holding funds and essential documents in a secure account until all transaction conditions are met.
Closing Coordination: The title company is pivotal in coordinating the closing process. They work with all parties involved, including buyers, sellers, real estate agents, and lenders, to ensure that all necessary documents are signed and funds are appropriately disbursed.
Document Preparation: The title company prepares and reviews all the legal documents required for the closing, including the deed, settlement statements, and other relevant paperwork.
Funds Disbursement: Once all the transaction conditions are met, the title company disburses funds to the appropriate parties, such as the seller, real estate agents, and lenders.
Record Keeping: After the closing, the title company ensures that all relevant documents are recorded in public records to officially transfer the property’s ownership.
Resolving Title Issues: If any title defects or issues are discovered during the title search, the title company works to resolve them before the closing, ensuring that the buyer receives a clear and marketable title.
Providing Guidance: The title company may offer guidance and assistance to buyers and sellers throughout the process, answering questions and explaining various aspects of the transaction.
Overall, the title company acts as a crucial intermediary, facilitating a secure and legally sound real estate transaction by verifying the property’s ownership and addressing any issues that may arise during the title search and examination process.
Ultimately, the primary role of a title company is insuring title to real property. Our staff has the expertise to make the process go smoothly and will be sure to handle your transaction with knowledge, professionalism, and courtesy.
