A property is the largest and arguably most important investment many people make in their lifetimes and title insurance is the best way to safeguard any real estate investment against forgery, fraud, and even human error. What many people don’t know is that it’s their right to choose which title company handles this important process if they are paying for the title insurance policy. Unfortunately, because it can seem so complicated and involved, most of them will settle for a recommendation without doing research into which title company is the best option for them.
As an attorney-backed title company that has seen our fair share of botched titles, we believe the company you choose matters. We also believe that to make the most informed decision, you need to understand what title insurance is, why a title search matters, and what makes choosing the right title company such a crucial decision.
What is Title?
Simply put, title is the concept of ownership rights. When you “hold title,” you own the right to the property in question. It can be a little misleading because title in and of itself is not actually a physical document and is often confused with the deed, which is the formal document showing ownership.
A common analogy to help you understand the difference between these two things is to consider a book title. Like a property title, you can’t physically hold the book title in your hand, but you can hold the book the same way you can hold a deed.
What is a Title Search?
A title search is an early step in the real estate closing process that examines public records on a property to confirm its rightful, legal owner. It’s easy to assume that if someone is selling property, they must have the right to do so, but it’s easy for a seller to misrepresent themselves to a real estate agent or even be completely unaware of an issue that prevents the sell at all. This step in the real estate closing process is the first one that ensures you obtain the rights to property free and clear.
Common issues found during a title search include unresolved liens (such as a mortgage), easements, and restrictive covenants. These things follow the property, not the owner, and if you skip a title search you may inherit encumbrances such as unpaid property taxes, HOA fees, or bills for past home improvements.
There are also sometimes concerns about who really owns the property. This can happen in cases where an individual has died but the heir (or assumed heir) has tried to sell the property before it goes through the probate process. There are also known cases of individuals attempting to commit fraud by selling properties out from under the rightful owner.
Once a title search is performed and title is determined to be free and clear, the title company can issue title insurance.
What is Title Insurance?
Title insurance is a policy that protects your investment and property rights. There are two types of title insurance issued at a closing:
Owner’s Title Policy
In our area of Florida, the owner’s policy is typically paid for by the seller. The policy will protect the buyer against legal claims that arise due to forgery, fraud, or even human error. It’s a one-time fee that safeguards you as well as your inheritors, trustees, and beneficiaries. It will also cover potential legal fees for settling any claims against your ownership rights. This policy will protect you for as long as you own the property.
Lender’s Title Policy
The lender’s policy may be paid for by either party and is almost always required by the lender on a purchase that utilizes a loan. As you may have guessed, this policy protects the lender’s interest in the property in much the same way it protects the owner. However, it is important to note that the lender’s policy only protects the lender and does not extend any coverage to the property owner. This policy will protect the lender as long as they have interest in the property.
Why Does the Right Title Company Matter?
Title companies make money on the sale of title insurance policies and just like every industry, there are companies that put their bottom line above the interests of their clients. When a title company’s main goal is to make money no matter what, it can lead to ethically questionable decisions or even an increased likelihood of human error due to the volume they are trying to keep up with.
At Concierge Title, we hold ourselves to a higher standard. Not only do we provide diligent, ethical service, but as an attorney-backed title company, we’re also adept at identifying legal issues early that could complicate or cancel a real estate sale. That gives everyone more time to correct the problems that arise and helps you and your clients stay on track to the closing table.
We believe in delivering White Glove Service to everyone, no matter if they are the buyer, seller, real estate agent, mortgage lender, or home builder. Click the pages under “Services” on our main menu to learn more about what we do make sure you and your clients are protected and informed throughout the entire closing process.