Forum Questions
Title Insurance – What is it and why do you need it?
Q: What is title insurance and why do I need it?
A: Great question! Title insurance can be confusing. Please read below to learn more about title insurance, when you need it and why you should have it. If you still have questions, please don’t hesitate to contact Closeline Settlements and we would be happy to help you.
What is title insurance?
Title insurance is protection against losses that occur from various matters affecting the title to real estate that you are about to acquire.
Do I have to purchase title insurance?
You do if you are getting a mortgage, because all mortgage lenders require the protection. This is called a loan policy and is issued for an amount equal to the amount of money being borrowed.
If the bank requires a Loan policy, why do I need to buy an Owner’s policy?
The bank’s policy only protects the interest of the bank. YOU, the homeowner, may be liable for title problems even though the bank is insured.
I paid for a title search – why do I also need to buy title insurance?
Not everything can be discovered by examination of public records. A title policy insures against many defects, which could not be discovered in a title search. It also insures against errors made in the title search itself.
Is Owner’s coverage expensive?
No. Unlike other forms of insurance, the one-time premium is your only cost, and covers you throughout your ownership and after. There are no annual payments to keep your Owners policy in place. When you are already paying for a loan policy, the additional cost for an Owner’s policy is usually minimal.
What is covered under an Owner’s Policy?
As a homeowner, you will receive the following coverage from your Owner’s policy:
- Insurance that you are the owner of the property
- Insurance against losses from any liens or encumbrances on the property except those listed in the policy
- Insurance against your title being rejected by a subsequent buyer because it is unmarketable due to a title defect or lien
- Insurance that you have a legal right of access to the property
The title policy not only protects you against losses due to title claims covered by the policy, but it also pays for the attorney fees and costs in defending the title.
You are covered under the policy for as long as you own the property, and also for liability after you sell the property if you provide title covenants in your deed to the new buyer.
Top 10 Reasons Why You Should Have Owner’s Title Insurance
- Forgery
- Fraud in the execution of documents
- False impersonation by someone purporting to be the owner of the property
- Incorrect representation of marital status
- Incorrect legal descriptions
- Unsatisfied claims not shown on the record
- Confusion due to similar or identical names
- Dower or courtesy rights of spouses of former owners
- Incorrect indexing of the land records
- Clerical errors in recording legal documents
Split Closing Question
Q: I am located in Georgia but buying a vacation home in Florida. How does that work?
A: You are referring to a split closing, where the buyer and seller in a purchase transaction are in two different locations. A title company can handle both sides of the transaction assuming they are licensed in the state that the purchase property is located in, and have access to the appropriate signing authority in the other state. For your question in particular, once all the title work was processed and everything was ready, we would schedule two closings; one with you in your home state of Georgia, and one with the seller of the Florida property. One thing to keep in mind is that no funds would be exchanged until all originals from both closings were received and verified. Another option, of course, is we can schedule one closing in Florida and you could travel there to attend in person.
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