WHAT IS A TITLE COMPANY?
Title companies conduct “title searches” looking at real estate records trying to find information about the property you are trying to purchase. Such information includes:
- Identifying the legal owner of the property
- Liens
- Judgments
- Unpaid taxes
After the search is complete, the title company will complete a “commitment of title insurance” on behalf of either the lender or the buyer. This step ensures the buyer is receiving a clear title on the property and any outstanding issues are resolved. Once these steps are done, the title company will use their underwriter to issue a policy of title insurance covering the lender and the buyer.
ARE ALL TITLE COMPANIES CLOSING COMPANIES?
Unfortunately, no. Some title companies only sell the insurance and others only work in escrow. Rochford Law & Real Estate Title can help you with all of your closing needs.
WHAT IS A CLOSING ATTORNEY?
A closing attorney represents either the buyer or the seller in a real estate transaction. One attorney can’t do both. They are available to review the documents and protect you from potential mistakes in the closing process.
WHAT IS THE DIFFERENCE BETWEEN A TITLE COMPANY AND A CLOSING ATTORNEY?
There is a bit of overlap between the title company and closing attorney responsibilities. Both can conduct title research and file paperwork on your behalf. However, only the title company issues the insurance. The closing attorney reviews all the documents associated with the deal, will help you look for fees to eliminate, and point out any additional liabilities. Title companies have attorneys on hand, but they are there to answer and solve issues related only to the title search and insurance. They cannot guide you and give you feedback about the purchase of the house.
WHAT IS A TITLE?
A title is a right to ownership of specific real estate property. Included is the right of possession, right of exclusion, right of control, the right of enjoyment, and right of disposition. Titles can change hands through a will, court decree, law, or by selling the property. Any time a title is transferred it is recorded in a deed and filed with county clerks.
WHAT IS TITLE INSURANCE?
Title insurance is a policy that protects the insured from a financial loss related to the ownership of a property. A property’s title relates to all your legal rights to own, use and dispose of real estate, both land and improvements. Title insurance protects against any possibility of future loss in the event legal rights of ownership to a specific property are challenged. The two most common types of title insurance are: an owner’s title policy and loan policy.
WHAT CAN MAKE A TITLE DEFECTIVE?
Many defects can hinder the transfer of a title:
- Fraud
- Unknown
- Heirs
- False affidavits
- Unpaid judgments
- Unfiled liens
- Forged documents
- Improperly indexed documents
- Errors in tax records
WHAT TYPES OF POLICIES ARE AVAILABLE?
The two most common types of title insurance are: an owner’s title policy and loan policy. The loan policy protects a lender in a real estate transaction; they have first lien position and good equitable title up to the amount of the value of this policy, which is typically the loan amount. A loan policy is effective for as long as the mortgage is in force. An owner’s policy protects the buyer or new owner of the property against loss up to the full value of their policy, which is typically the amount of their investment or the sales price of the property. The owner’s policy is effective for as long as the owner or their heirs own the property. An owner’s policy in Texas is optional and may be refused but not advisable. All prudent lenders will require a loan policy.
WHO NEEDS TITLE INSURANCE?
Buyers, lenders and sellers all benefit from title insurance. Lenders usually require a loan policy to protect their loan. An owner’s title policy protects the new owner’s interest in the real estate purchased from claims, and your title insurer may assume responsibility for all legal expenses covered related to the defense of your property, if a challenge is ever made. The seller benefits from the policy because it represents a guarantee that the property being sold is free of any liens and encumbrances.
WILL MY REAL ESTATE AGENT KNOW ANYTHING ABOUT THE TITLE TO THE HOME?
Many real estate agents will have a thorough understanding of what a title is. The nuances of title insurance, and recommend a trusted title company. However, no one will know precisely what information is related to the title until a title search is completed.
HOW MUCH CAN I EXPECT TO PAY FOR TITLE INSURANCE?
Rates vary depending on how much you paid for the home. The policy usually takes up less than 10% of your total closing costs.
DO I NEED TITLE INSURANCE?
Unless you are paying for your home out of pocket, your lender will more than likely require you to purchase title insurance. It’s advisable to purchase a policy to protect yourself as well. By doing so, you are protecting yourself from title defects that may give someone else claim to your property.
WHAT DOES TITLE INSURANCE PROTECT YOU AGAINST?
There are many things title insurance protects you against, but some of the most common are:
- Fraud
- Forged deeds, releases or wills
- Misinterpretations of wills
- Deeds by minors or by persons of unsound mind
- Deeds by persons supposedly single, but in fact married
- Liens
- Unpaid taxes
- Unpaid inheritance
WILL I HAVE TO PAY FOR TITLE INSURANCE EVERY MONTH?
No. Title insurance, unlike other insurance policies, is not billed as a monthly premium. It’s a one-time cost you pay at the time you purchase your home. The policy lasts for the time you and your heirs own the property.
CAN THE BUYER PICK THE TITLE COMPANY?
Yes. Sellers can require a buyer to purchase title insurance, but they can’t dictate which company to use.