FAQ

According to the American Land Title Association, title companies find and fix problems in the chain of title in 25% of all real estate transactions – usually without the borrower or lender even knowing it! In addition, title insurance underwriters pay millions of dollars each year in claims. Title insurance provides significant value to both lenders and property owners.

Before closing, Boutique Title searches the public records for all matters affecting the chain of title. The search entails examining the records in the offices of the County Recorder, Clerk of Courts, and other municipal and county offices. These records include recorded documents, judgments, liens, taxes, street easements, sewer assessments, special taxes and other matters that could affect property ownership.

Through careful examination of these records, we determine who owns the property and what interests may already exist on that property. This process, called a title search, provides early warnings of title flaws that must be dealt with before the property can be sold or refinanced.

In those transactions where title insurance is involved, the title company must determine the insurability of the chain of title as part of the search process. This leads to the issuance of a title insurance policy, which insures the existence or non-existence of rights to the property.

Title insurance is substantially different from other types of insurance coverage. Title insurance emphasizes risk prevention rather than risk assumption, so the coverage offers the best possible opportunity to avoid claims and losses in real estate transactions. Because of the important corrective work that title professionals perform, it is rare for lenders or property owners to suffer a loss under their title insurance policy.

Title insurance is charged only once at closing, where other forms of insurance typically require monthly or quarterly payments.

A buyer is not legally required to have title insurance. If a buyer pays cash for a property and does not take out a mortgage, title insurance would not be required. However, this would leave the buyer open to a potentially devastating loss. If there is a mortgage on the property, the lender almost always requires the buyer to purchase a lender’s title insurance policy to protect its interests.

What are the different types of title insurance?

1. The Lender’s Policy:
   There are two types of title insurance: lender’s title insurance and owner’s title insurance. Most lenders require a lender’s title insurance policy when they issue you a loan. The lender’s policy is usually based on the dollar amount of your loan. It protects their investment (the mortgage) and protects them against loss should a title problem arise. The policy amount decreases each year and eventually decreases as the loan is paid off.The lender’s title insurance policy only protects the lender’s interest in the property should a problem arise. It does not protect the owner and will not pay the owner’s legal expenses if a title problem exists. Only an owner’s title insurance policy will protect the property owner.
2. The Owner’s Policy
   The owner’s title insurance policy is usually issued for the amount of the real estate purchase. You pay a one-time premium at closing and the coverage lasts as long as you or your heirs have an interest in the property. This may be even after you have sold the property. Only an owner’s title insurance policy fully protects the property owner should a title problem arise that was not uncovered during the title search. An owner’s policy can also protect you by paying for any legal fees involved in defending a claim to your title.
3. What does an owner’s policy provide?
   o Protection from financial loss due to claims against the title to your property, up to the face amount of the title insurance policy.
   o Payment of legal costs if the title insurer has to defend your title against a covered claim.
   o Payment of successful claims against the title to your property covered by the policy, up to the face amount of the policy.

Even the best title search, performed by the most experienced and capable experts, cannot ensure that a title hazard does not exist. Some problems just are not revealed in the public records. Years ago, there may have been an honest mistake in determining the status of title; or today, a previously unknown heir may come forward to claim ownership on a deceased relative’s property. To help protect you in these events, Boutique Title can issue you an owner’s title insurance policy. This will insure you against most of these unforeseen problems. We not only help to remove the flaws that show, we also insure against those that may not show.

Initial Request for Title Insurance / Records Search
A client (usually the buyer’s attorney or the buyer or, in the case of a refinance, the lender) places an order for title insurance with the title company. The company initiates several searches that are necessary to tell the full story of the current state of the chain of title. These searches include county searches against the property, judgment searches against the individual parties involved in the transaction or in the chain of title, tax searches, tideland and patriot searches. These searches are usually done with the help of independent search companies or through accessing online records. Full title abstracts will be returned to the title agent with copies of all pertinent documents.

Title Examination
The skill and expertise of the title agent is the key to providing the client with an accurate title report. A title company will begin the review by analyzing the documents of record. The title company then makes an interpretive analysis of all recorded matters to evaluate their impact on the title to the property.

Binder / Commitment)
The title agent at the title company issues a title commitment, indicating their intention to insure the title on a given property and specifying the amount of insurance, covered parties, exceptions and requirements to be met in order to issue its final policy.

Clearing the Clouds
The title company then works to clear any clouds to the title. For example, if there is an open judgment on the property, the title agent contacts the parties involved in an effort to get the judgment paid and clear the title. The title agent will work with buyers, sellers, lenders and their attorneys to work through the often complex title issues that can arise during the search and examination process.

Closing / Premium Payment
Unlike other insurance policies, there is a one-time only premium payment for title insurance. The premium is paid at the closing table by the party indicated on the sale and purchase contract or by the borrower in the event of a refinance. Closing can occur at the attorney offices or title company or any place elsewhere depending on the circumstances involved.

Policy Issued & Delivered
After the closing, the title company issues the actual title insurance policy. The buyer’s policy is generally sent to the buyer’s attorney for delivery. The lender’s policy is typically sent directly to the lender.

Generally, the seller will pay for the owner’s title insurance policy and the buyer will pay for the lender’s title insurance policy. However, this custom can vary geographically by county. In Miami-Dade County and Broward, it is customary for the buyer to pay for both owner’s and lender’s title insurance. However, these customary practices can be altered by the terms of the purchase and sale contract. The premium is included as part of the closing costs. In Florida, the cost for a lender’s policy is a nominal fee added to the owner’s policy premium.

In Florida, the premium rates are set by the Florida Department of Insurance. That means the premium, or cost of coverage, is the same regardless of which title company you choose. Depending on the age of the current policy and other factors, a client may be eligible for significant rate reductions.

Title insurance protects you and/or your lender should someone challenge the title to your property because of title defects which were unknown when you purchased your property. Some examples of problems that can occur after you purchase your property include fraudulent acts by prior owners — such as forged documents that transfer no title to the real estate, forged mortgages, or forged satisfactions or releases of mortgages, impersonation of the true owners of the land by fraudulent persons, and/or instruments executed under expired or fabricated power of attorney.

Here are just a few of the most common hidden risks that can cause a loss of title or create an encumbrance on title:

• False impersonation of the true owner of the property
• Forged deed, releases, or wills
• Instruments executed under invalid or expired power of attorney
• Undisclosed or missing heirs
• Mistakes in recording legal documents
• Misinterpretations of wills
• Deeds by persons of unsound mind, by minors, or by persons supposedly single, but in fact, married
• Fraud
• Liens for unpaid estate, inheritance, income, or gift taxes

No, it is not enough. If there is a complete failure of title, you have no protection and could lose both your property and equity in the property.

A lender’s title insurance policy protects only the lender’s interest in the property, not the current owner’s. That is why Boutique Title provides the owner’’ title insurance policies – to protect the owner’s interest in a piece of property should a claim arise. Purchasing an owner’s title insurance policy at the same time that the lender orders the lender’s title insurance policy can result in a savings.

Is title insurance expensive?
The cost of title insurance on any piece of property is very small when compared with the benefit and security it gives – and, there are no annual payments to keep the policy in force. The original premium is your only cost as long as you or your heirs own the property.

Not at all. A “deed” is merely an instrument whereby a seller transfers his or her right of ownership, whatever it may be, to you. It is not proof that the person described as the seller is actually the owner. It does not do away with claims or rights others may have in the property. From the deed, you cannot determine for certain what rights, liens or claims may be outstanding against your title.

If you purchased or mortgaged your property recently, you may be able to save money on the purchase of your new title insurance policy by asking for a special ‘refinance’ or ‘reissue rate’. Simply provide a copy of your prior title insurance policy to Boutique Title prior to closing, or ask your local Boutique Title closing agent for more information.