A Title Search involves a buyer, a seller and a title company or real estate attorney. Real estate law in Florida mandates you must conduct a title search before you can close a deal on a house if you want title insurance to protect you. It’s a paper chase that involves very little paper because we now have digital technology to assist us.
Defining the Basics: What is the Title Search?
Wow! I don’t get it? Title Search – What’s That?
Some buyers might find this term very confusing. We are here to set the record straight. The search is defined as a “thorough examination of all the property records to make sure that the person or company claiming to own the property does…”
Catch up with Closing Tips with a look back to our previous blog.
Many buyers might ask why they must do this and the answer is deceptively simple:
1. Your purpose in having a title search is to determine that the seller legally owns the property. (Perhaps, back in the history of the property, a lien against it exists. Likewise, perhaps one of the previous owners neglected to pay taxes. A divorce or an inheritance might also create clouds on your title.
2. Likewise, you certainly do not want anyone to claim ownership or rights to the property after you have taken possession and moved into the property.
3. The title search mandates an extensive investigation into the paperwork of the house and property. We hope the title company and your lawyer find no one in the past who can claim ownership. In that case, the title is declared a “clear” or a “clean” Title. A clean title is a very precious document. You should prize it highly.
Clouds on the Title Mean Clouds on Your Horizon
A cloud on a title is actually a legal term. What this means is there are one or more situations which could cause the law to question the ownership of the property. The current owner has no right to sell unless he fixes such issues or unless the buyer agrees to take title subject to those issues.
The search also involves buying title insurance. When you purchase your home, at closing, you will receive a document most often called a deed. The deed shows the seller is transferring their legal ownership, or “title,” of the home to you. This document should not be signed if the owner does not have a clean title to offer you.
Owners’ Title Insurance to the Rescue
Clouds are in My Title? Is That a Good Thing?
There is another type of title insurance that will probably make you feel more secure. We are referring to the Owner’s Title Insurance. You will want to have Title Insurance as protection if someone declares they have a claim against your home.
Typically such claims and subsequent lawsuits emerge from a previous owner’s failure to pay taxes or other obligations. Likewise, an unpaid contractor might show up on your doorstep. He or she might unhappily declare they were not paid for work on the home before you purchased it.
Another cloud on a title might involve the IRS. Court judgment liens can attach like parasites and create clouds on your Title.
Effectively, the new property owner is protected from claims or liens created by the previous owner. It would cover claims/liens that were “due to the actions or inactions of a prior owner.”
In this case, the total amount of the policy is usually based on the purchase price for the home. Generally, the seller pays a one-time premium for your Owner’s Title Policy. It remains in effect for as “long as you or any heirs, own the property.”
Both the owner’s and lender’s title insurance provide positive assurance that the title search has been validated. In other words, the title company believes the Title is clear and without fault.
Do not confuse the Owner’s Title Insurance with the Lender’s Title Insurance.
The Lender’s Title Insurance:
Most lenders require a Lender’s Title Insurance policy. As you might assume, this type of title insurance protects the lender’s investment. The amount of Title Insurance is based on the dollar amount they intend to loan you. Principal Law alerts you to the fact that, as a buyer, you will probably pay for the lender’s title insurance.
Title Insurance is listed on the Loan Estimate that is given to you by the lender and title company. So, don’t let it surprise you.
One Stop Shopping at Principal Law
You might have noticed that Principal Law offers title and closing services in addition to regular real estate legal representation. This service makes the transition from homebuyer to homeowner easier for Principal Law clients.
We are thus able to be an attorney closing agent for you. Below you will find a list of the advantages you might enjoy.—And without the rumored higher rates.
The Terrific Take-Away Today: The Attorney Closing Agent
We Survived Closing. We’re Home.
Thank You, Principal Law Firm, P.L.
A. An attorney closing agent will be able to assist with all facets of the closing including drafting the purchase and sale contract…
B. Likewise, the attorney will be examining title, issuing title insurance, and drafting all of the closing documents…
C. This duty includes drafting the deed to transfer the property.
Principal Law wants you to know that “Most attorney closing agents charge a similar settlement fee as non-attorney closing agents. She cautions home buyers, “Also, remember, in Florida, the title insurance rates are promulgated by the State. And therefore, the premiums charged are the same regardless of who you close with.”
You don’t have to have an attorney to close on your house, but we charge no extra cost to use us—It’s the benefit of handling by a law firm without the law firm fees.
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