Title insurance is a specialized insurance policy that protects buyers and lenders against claims that may arise over the title of a piece of property. The policy is a one-time purchase that remains in effect for the duration of ownership, so if, for example, your children inherit your home, the title insurance coverage would continue to insure the property.
Why Would There Be Claims Against The Title Of My Property?
When you purchase real estate, part of the process is detailed research into the public records pertaining to that property. That search should reveal any type of encumbrance on the property including:
- Tax or contractor’s liens
- Claims of ownership by heirs
- Creditors of previous owners
- Easements that restrict your ability to build on a portion of the property
In certain cases, these encumbrances may not be discovered through the research process at the time of purchase, and those surprises called hidden risks, are precisely what title insurance protects against. Your owner’s title insurance policy obligates the title company who issued it to defend your title at their cost and to compensate you for any lost value of the property that arises from such a claim.
Am I Required To Have Title Insurance?
While there is no real estate law requiring you to carry title insurance, most mortgage lenders will require that the property be covered by both a lender’s title insurance policy, and an owner’s policy may be offered by the seller as part of your real estate contract. If you’re purchasing real estate with cash, you are not required to buy title insurance, its sound business practice to protect yourself and your investment by buying a policy or requesting the seller pay the cost of the policy.
Who Pays For The Title Insurance Policies?
Ultimately, the party responsible for buying the title insurance policy is determined by the sales contract. There are different customs that vary by county, for example, in Sarasota, Collier, Broward, and Miami-Dade counties, the seller typically pays for the title search, while the buyer pays for the owner’s policy, while in Palm Beach County, the seller usually pays for both.
It’s also important to note that the party paying for the policy selects the title agent, and you may wish to use a real estate attorney to serve as the title agent.
The real estate lawyers at the Kissimmee Law Firm of Overstreet, Miles, Cumbie & Finkenbinder can help you understand the title insurance process and walk you through the specifics of negotiating a fair sales contract. Call us at 407-847-5151 for a confidential consultation.