Title Insurance Facts You Need to Know
Whether you are selling or buying, once you agree to all the details of a purchase or sale of real estate, a contract that outlines the details of the transaction is prepared, signed (or executed) and forwarded to a closing/title agent. The contract is most often prepared by a realtor or attorney. The closing agent is, likewise, either a title company or real estate attorney.
Once the contract is received by the closing agent, a file is set up, but typically no work transpires until a title order is requested from the lender to the closing agents. Most real estate contracts are contingent on lender financing for the buyer so until a bank or other funding source says yes, the financing is secure, funds are not expended by the closing agent. Once financing is approved, the work begins.
A title search is key
The closing agent orders a title search and review the entire chain of title relevant to the transaction. This is a vital step because a lot of issues can crop up over time that cloud title to any property. Examples are past estate taxes, judgments against a prior owner, delinquent income taxes, sales tax warrants, prior unpaid mortgages, improperly prepared and/or executed deeds in the chain of title. All of these and more can change who has the legal title to the property, and it's buyer beware. Without a title search and title insurance, the buyer is unprotected from these title defects. He or she takes title subject to all outstanding obligations/liens and defects.
Title Insurance protects both the buyer and the lender. The lender will receive, at closing, a Mortgagee Title Policy for the amount of the mortgage and the buyer will receive an Owner's Title Policy in the amount of the purchase price. The policies last as long as the mortgage is on the property and the buyer owns the property. The insurance premium for both policies is paid at closing. Typically, the seller pays for the Owner's Title Policy and the buyer pays for the Mortgagee Policy.
Do not buy without title insurance
I cannot stress how important Title Insurance is. The purchase of a home is the largest single purchase many folks make in their lifetime—don't make that purchase without the security and protection of Title Insurance.
What's the purpose of a closing agent
The closing agent performs many functions other than issuing title insurance. The closing agent:
- orders payoffs to clear existing mortgages off the property,
- assures all fees are current with the homeowners association,
- drafts the documents to be signed at closing and
- prepares the closing or settlement statement
The closing statement is the one document which outlines all closing costs, layoffs necessary to clear title, prorates real estate taxes and all other matters to ultimately arrive at the funds the buyer must bring to closing and the resulting proceeds the seller will receive at closing.
All communication with the buyer, seller, realtor, lender and other relevant parties is done by and through the closing agent, which in Florida is either title companies or real estate attorneys. You can chooose whether to use an attorney or a title company, and the difference in cost is negligible.
How closing agents are paid
Typically, closing agents are paid by receiving a premium on the title insurance and by charging a closing fee. While it seems as though real estate attorneys would charge more to act as a closing agent than a title company, that is usually not the case. Many times attorneys charge the same or even less to act as a closing agent. Personally, I have found that my office is within 5 percent, (sometimes more, sometimes less), with competing title companies in the area. I'd like to think with a law degree and more than 30 years experience in Florida Real Estate law I can add significant value to your transaction at a price competitive to that of a title company. Choose Miller, Crosby & Miller as your closing agent on your next transaction, and see the difference for yourself.This is the content. This is demonstration text. Click 'edit' above to create your own content.