Q: What is title insurance?
A: Title insurance offers an affordable and reliable way to protect yourself from total or partial economic loss caused by undisclosed defects in the title to your property.
Q: Why do I need title insurance?
A: When you buy a home, or other property, you expect to enjoy certain benefits from ownership. Title insurance is designed to protect these rights. For example, you expect to be able to occupy and use the property as you wish, to be free from debts or obligations not created or agreed to by you, and to be able to freely sell or pledge your property as security for a loan.
Q: What if I have a problem? Do I have to lose my property to make a claim?
A: Not at all. At the mere hint of a claim adverse to your title, you should contact your title insurer or the agent who issued your policy. Title insurance includes coverage for legal expenses which may be necessary to investigate, litigate or settle an adverse claim.
Q: What does this cost?
A: The cost is regulated by the State of Florida, and will vary depending mainly on the value of your property, and the coverage you select or may be required by your lender. The important thing to remember is that you only pay once, then the coverage continues in effect for so long as you have an interest in covered property.
If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property, giving warranties of title to your buyer, your coverage continues.
Likewise, if a buyer gives you a mortgage to finance a purchase of covered property from you, your coverage continues to protect your security interest in the property.
Title insurance rates are strictly regulated by the state. We serve as agents for several national underwriters, and our company is licensed by the State of Florida. The rates we charge for title insurance are the same rates offered by all other title companies and title attorneys in the State of Florida.
Q: Why are there separate title policies for owners and lenders?
There are two types of title insurance: owner’s title insurance, called an Owner’s Policy, and lender’s title insurance, called a Loan Policy. Most lenders require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It only protects the lender’s interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases as you pay down your loan and eventually disappears as the loan is paid off.
An Owner’s Policy is usually issued in the amount of the real estate purchase price. It is purchased for a one-time fee at closing and lasts for as long as you have an interest in the property. Only an Owner’s Policy protects the buyer should a covered title problem arise.
Q: What does the title insurance cover?
The possible hidden title problems which are covered by title insurance can include:
- Errors or omissions in deeds
- Mistakes in examining records
- Undisclosed heirs
An Owner’s Policy provides assurance that your title insurance underwriter will stand behind you—monetarily and with legal defense if needed—if a covered title problem arises after you buy your home.
Q: Can you be a little more specific about the types of claims, or risks, covered by title insurance?
A: Sure. First understand there are basically two different levels of coverage: Standard coverage and extended coverage.
Standard coverage handles such risks as:
- Forgery and impersonation;
- Lack of competency, capacity or legal authority of a party;
- Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner);
- Undisclosed (but recorded) prior mortgage or lien;
- Undisclosed (but recorded) easement or use restriction;
- Erroneous or inadequate legal descriptions;
- Lack of a right of access; and
- Deed not properly recorded.
An extended coverage policy may be requested to protect against such additional defects as:
- Off-record matters, such as claims for adverse possession or prescriptive easement;
- Deed to land with buildings encroaching on land of another;
- Incorrect survey;
- Silent (off-record) liens (such as mechanics’ or estate tax liens); and
- Pre-existing violations of subdivision laws, zoning ordinances or CC&R’s.
As with any insurance contract, the insuring provisions express the coverage afforded by the title insurance policy and there are exceptions, exclusions and conditions to coverage that limit or narrow the coverage afforded by the policy.
Also, some coverage may not be available in a particular area or transaction due to legal, regulatory or underwriting considerations.
Please call us for more information about your title insurance policy.
First Title & Abstract, Inc. – the most established Naples title company, with offices on Marco Island and in Naples.