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What is title
insurance?
A
title is the foundation of property ownership. It is the owner's right to
possess and use the property. Transferring the title to real estate is
different from transferring the title to other items because land is permanent
and can have many owners over the years. Various rights in land (such as
mineral, air or utility rights) may have been acquired by others by the time you
come into possession of it, even if the land has never before been built upon.
To transfer a clear title to a piece of land, it is first necessary to determine
whether any rights are outstanding.
Title insurance is your policy of protection against loss if any of these
problem - even a "hidden hazard" - results in a claim against your ownership.
If offers financial protection against paying claims and fees involved in
defending the title should a dispute arise. Whether you are purchasing a
home from a current occupant or building a new home yourself, you will need to
ensure that there are no unpaid taxes, debts or liens associated with the
property. While there are no past owners associated wit newly constructed
homes, there may be other owners of the land on which the home is being built.
A title search will uncover any existing liens or ownership claims as well as
any unpaid debts of the contractor that is building your home - debts that you
could be held responsible for unless you are protected.
Besides the 2 types of policies, of significant importance is the financial
strength and service of the underwriter. After all, its the underwriter
who is responsible for paying title claims. At The Title Team, we've
chosen Fidelity National Title Insurance Company to underwrite all of our
policies. With origins dating back almost 150 years, Fidelity National
Title Insurance Company (FNTIC) is one of the nation’s premier real estate
services companies and is recognized for its innovative integration of real
estate transaction closing processes. A strong company with substantial reserves
and expert staff, Fidelity National Title will be there to support you should
the need arise.
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Are there
different types of Title Insurance?
YES!! There
are two basic types of policies: an Owner’s policy to protect the owner,
and a Loan policy to protect the lender.
All lenders require title insurance (also
known as a loan policy or lender's policy) to protect the loan they issue the
buyer against the cost of settling any disputes that may arise. In
Florida, the cost of lender's title insurance is based on the amount of your
loan. Unlike "traditional insurance", like auto or homeowners, there is no
annual premium. Title insurance is a one-time charge paid at closing.
The Lender's Policy does not protect the buyer's interest.
To protect the buyer (owner) an Owner's
Policy should be obtained to protect them against any problems that were not
uncovered in the title search. In Florida, Owner's Policies are issued in
the amount of the real estate purchased (or appraised value). You are
covered under the policy for as long as you own the property, and also for
liability after you sell the property if you provide title covenants in your
deed to the new buyer.
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What's
a Title Search? / What's an Abstract?
An abstract is a history of the property title as revealed by the public records.
It may not show property limitations and restrictions. Abstracts may contain
errors and do not disclose "hidden hazards" that can threaten your property
title if you do not have a title insurance policy. The Title Search
is process by which an abstract is prepared.
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What if
there's a claim on my property?
If
a claim is made against your property, title insurance will, in accordance with
the terms of your policy, assure you of a legal defense - and pay all court
costs and related fees. Also, if the claim proves valid, you will be
reimbursed for your actual loss up to the face amount of the policy.
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What's a Deed?
A deed is not necessarily proof of ownership. A deed is just a document by
which the right of ownership in land is transferred, whatever that right may be.
It's not proof of ownership, and it doesn't do away with rights others may have
in the property. In addition, a deed won't show you liens or claims that may be
outstanding against the title.
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What's a Mortgage?
A
mortgage is a security instrument which places a lien on property to
secure the Promise to repay a loan.
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What's a
REVERSE Mortgage?
A reverse mortgage is a
loan against your home that you do not have to pay back
for as long as you live there. These loans can be paid
to you in a single lump sum of cash, as a regular
monthly loan advance or as a creditline that lets you
decide how much cash to use and when to use it. Or you
may choose any combination of these payment plans. The
loan is paid back when you die, sell your home, or
permanently move out of your home.
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What's a Note or
Promissory Note?
A
Promissory Note, or simply a Note, is evidence of a debt. It is a promise
to repay a loan, and states the terms of the loan. In the context of a
secured loan, it is secured by the Mortgage.
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This
is my loan. Why does my wife/husband have to sign too?
This is a common
question, frequently asked by a married borrower who is not yet divorced and is
refinancing their home, and by married couples where the loan is issued in the
name of only one spouse.
The simple answer is...
because the Florida Constitution says so.
Per the laws of the
State of Florida a spouse has an inherent interest in marital property. But, the
signing of a mortgage does not constitute any financial obligation by said
signor, nor does it infer any ownership of subject property other than the
interest already bestowed by said laws and by the constitution of the State of
Florida. The signing of a mortgage is used as an instrument allowing the
lender to collateralize the subject property in the public records of the county
in which the property lies. Consequently, no financial information is
needed by a signor of a mortgage and no financial obligation is reported as a
result of signing the mortgage. The financial obligation lies solely in
the signing of the promissory note.
Article X, Section 4,
of the Florida Constitution states that "the owner of homestead real estate,
joined by the spouse if married, may alienate the homestead by mortgage, sale or
gift..." Since this provision only authorizes conveying or mortgaging
homestead property to third parties with the joinder of spouse, by
implication it prohibits conveying or mortgaging homestead property to third
parties without joinder of the spouse.
Accordingly, Uniform Title Standard 18.1,
promulgated by The Florida Bar, provides:
ALLIENATION OF HOMESTEAD PROPERTY -
JOINDER OF SPOUSE
Standard: When the owner of
Homestead Property is married, the spouse MUST join in any conveyance or
encumbrance of the property, unless the property is held as a Tenancy by the
Entireties and is conveyed to the spouse or is held by one spouse and is
conveyed to both spouses as Tenants by the Entireties.
Those seeking further guidance may consult
Uniform Title Standard 18.1 and Article X, Section 4, of the Florida Constitute,
and/or their attorney.
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If the bank
requires a Loan policy, why do I need a to buy an Owner’s policy?
The bank’s policy only protects its interest. You, the homeowner, may be liable
for title problems even though the bank is insured.
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I paid for a title
search – why do I need to buy title insurance also?
A title policy
insures against many defects which could not be discovered in a title search, as
well as insuring against errors made in the title search itself.
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Is Owner’s Coverage expensive?
NO!!
A
ONE TIME premium covers you throughout your ownership and after.
When you are already paying for a loan policy, the additional cost for an
Owner’s policy is usually small.
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What’s Covered Under A
Standard Owner’s Policy?
The standard
Owner’s policy provides these basic coverages for a homeowner:
·
It insures
that you are the owner of the property.
·
It insures
against losses from any liens or encumbrances on the property except those
listed in the policy.
·
It insures
against your title being rejected by a subsequent buyer because it is
unmarketable due to a title defect or lien.
·
It insures
you have a legal right of access to the property
The title policy
not only protects you against losses due title claims covered by the policy, it
also pays for the attorney’s fees and costs in defending the title.
You
are covered under the policy for as long as you own the property, and also for
liability after you sell the property if you provide title covenants in your
deed to the new buyer.
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Why Should
I Have Owner’s Title Insurance?
These are just some
of the HIDDEN title risks that would not be disclosed by even the most
meticulous title search, but ARE COVERED by an Owner’s policy of title
insurance:
1.
Forgery
2.
Fraud in the execution of
documents
3.
Undue
influence on a grantor of a deed
4.
False
impersonation by someone purporting to be the owner of the property
5.
Incorrect representation of marital status
6.
Undisclosed or missing heirs
7.
Wills
not properly probated
8.
Misinterpretation of wills and trusts
9.
Mental
incompetence of a grantor
10.
Transfer of title by a minor
11.
Heirs
born after the execution of a will
12.
Incorrect legal descriptions
13.
Non-delivery of deeds
14.
Unsatisfied claims not shown on the public record
15.
Deeds
executed under expired or false powers of attorney
16.
Confusion due to similar or identical
names
17.
Dower rights of spouses of former
owners
18.
Incorrect indexing of the land records
19.
Clerical errors in recording legal
documents
20.
Delivery of deeds after the death of the grantor
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This is a
common question received from customers who have recently refinanced
their mortgage. The policy paid for and issued at closing is a Lender's
Policy, required by the lender to protect THEIR interest. The policy is
issued to the Lender, not the property owner. A new owners policy is not
typically issued when a property is refinanced, as the original owners policy
(usually) issued when the property was originally purchased, protects the
borrower for at least as long as they own the property. If there has been
a substantial increase is property value since the property was originally
acquired, a new owners policy issued at the current market value can be obtained
at moderate cost. Contact The Title Team for a quote.
If you
are the purchaser of a property, the title policy will be sent to you
approximately 2-3 months after closing. If this time has elapsed and you
have not received your policy, please contact the post closing department at
postclosing@titleteamfl.com for
the latest status.
What is the Closing/Settlement process? What can I expect at closing?
What does the Title Company do?
Your first look at the settlement process may be
on the day of closing, but the process itself begins much
earlier.
Once an order is received, the countdown to closing
begins. Timing is essential, to make sure all the ingredients for a successful
closing are in place for your arrival. When the contract or escrow agreement is
received, we will review it for completeness and accuracy. If an earnest money
or deposit check is received, it is promptly deposited into an escrow account,
where the funds will remain until the time of closing.
One of the first things we do upon receipt of an order
is to request preliminary title work. The abstractor searches public records and
prepares an abstract. We
examine the abstract and supporting documentation, and prepare a title
commitment which details any requirements which must be satisfied prior to
closing, and any exceptions or limitations that will appear in the final title
policy. We check the information for completeness and accuracy, and
compare the commitment to other documents, such as the contract and loan closing
instructions, making sure all information is consistent.
While the title evidence is being prepared, we are busy
coordinating other matters. If the contract calls for a prior mortgage to be
paid off, we or your loan officer will order payoff figures from the existing
lender. Ordering property inspections, surveys and termite reports are also
typical of other activities happening behind the scenes at this point in the
settlement process.
Any problems or discrepancies which may be discovered
are brought to the attention of the appropriate parties so that they can be
corrected. Frequently, many issues are resolved without the knowledge or
intervention by the parties involved. It is our job to facilitate
cooperation, coordination and compliance between all parties directly or
indirectly involved with the transaction.
Once the preliminary work is complete and all
information on the contract, loan closing documents and title commitment has
been compared and complied with, we are ready to prepare the HUD-1 Settlement
Statement. The HUD-1 Settlement Statement shows all the charges, receipts,
and disbursements related to the transaction. All costs must be shown on
the HUD-1. This includes costs paid at closing as well as pre-paid costs, such
as earnest money deposit or loan application fee.
As closing day approaches, we order any updated
information which might be required. Once we are satisfied that the paperwork is
in order, we confirm the date, time and location of the closing with all the
parties involved.
The closing is where it all happens. Everything done
behind-the-scenes leads up to this day. It’s time to close the transaction and
transfer ownership of the property from the seller to the buyer. Or, if you are
refinancing, satisfy your current mortgage and record your new one.
At closing, sellers will sign documents to transfer
ownership to the buyers. Buyers (and refinancers) will sign documents
provided by their lender which secure their interest in the property and
assorted other documents to comply with state and federal regulations.
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