SCHUTT LAW FIRM, P.A.
Phone: 239.540.7007
Title Insurance
01/19/2015
 1.   Title insurance agents spend their time and resources preventing claims and protecting homeowner’s property rights.

Title insurance agents and real estate attorneys protect a homeowner’s financial investment by determining that ownership of the property they purchase is transferred to the homebuyer free and clear from any of the previous owner’s debts or other legal obligations. This is why, on average, these title insurance agents and real estate attorneys retain about 80 percent of the one-time title insurance premium consumers pay to cover the cost of discovering, identifying and repairing events that occurred in the past. What’s included in the premium varies due to state regulation, but could include the cost of conducting a title search, examination, correcting errors, issuing the policy, and, frequently, the settlement or closing for consumers. Insurance agents for other forms of insurance have none of these responsibilities. Additionally, part of the title insurance policy premium a consumer pays goes toward the costs of running a small business such as payroll, rent, insurance, utilities, licenses, office supplies, equipment and more.

2.   The title search and insurance policy makes the United States property transfer system the most efficient system in the world.

A homebuyer wants to know that they are not inheriting any existing debts or legal problems when they receive the keys to their new home. Before a consumer purchases a home, title professionals and real estate attorneys search the public records for any problems with the home’s title and chain of ownership. The search process includes reviewing a previous owner’s delinquent taxes, undisclosed liens (such as unpaid contractors or utilities), prior legal judgments (such as child support liens) or issues arising from forgery or fraud. The title search process leads title agents to collect $4.8 billion in back income taxes and recover $325 million in unpaid child support annually. The title insurance industry, through its preventative measures, pays significantly less in claims compared to other forms of insurance which charge yearly premiums to provide insurance protection for future events. Homeowners pay a one-time fee for an owner’s title insurance policy, which financially protects their investment for as long as they own the property.

3.   Title insurance protects consumers and ultimately reduces the total cost of homeownership.

Not only does title insurance protect homeowners, it also reduces the total cost of homeownership. This is often an overlooked benefit to consumers. Since title insurance helps eliminate risk in property ownership, mortgage lenders can offer loans at reduced interest rates—saving the homeowner money each time they make mortgage payments. The slightest change in an interest rate can save homeowners money. For a borrower taking out a 30-year fixed-rate loan for $200,000, getting an interest rate of 4 percent instead of 4.5 percent translates into almost $60 in savings per month, according to the Consumer Financial Protection Bureau. Over the first five years, the borrower would save about $3,500 in mortgage payments.

For more information on title insurance, title agents or to locate a local title insurance company, please visit www.homeclosing101.org
WHY TITLE INSURANCE?
Owning real estate is one of the most precious values of freedom in this country. You want the assurance that the property you are buying will be yours. Other than your mortgage holder, no one else should have any claims or restrictions against your home.

Title insurance is issued after a careful examination of the public records. But even the most thorough search cannot absolutely assure that no title faults are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Title insurance eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property.

Title insurance is different from other types of insurance in that it protects you, the insured, from a loss that may occur from matters or faults from the past. Other types of insurance such as auto, life, or health cover you against losses that may occur in the future. Title insurance does not protect against any future faults, but does protect you from risks or undiscovered interests. Another difference is that you pay a one-time premium for a policy that remains effective until the property is sold to a new owner - even if that doesn't occur for decades.
What is a Lender's Policy?

A lender's policy, also known as a loan policy or a mortgage policy, protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of the sale.

This policy only protects the lender's interest. It does not protect the purchaser. That is why a real estate purchaser needs an owner's policy.
What is an owner's policy?

An owner's policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. You should protect the equity in your new home with a title policy.

What does an owner's policy provide?

- Protection from financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy.
- Payment of legal costs if the title insurer has to defend your title against a covered claim.
- Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy.
Why the seller needs to provide title insurance?

Any purchaser will need evidence that his investment in your property is free of title defects. The title insurance policy that you provide the purchaser is a guarantee that you are selling a clear title to your real estate, unencumbered by any legal attachments that might limit or jeopardize ownership. It will reassure your purchaser that he or she is protected from any risks or losses and could help you close your deal.
Why the buyer needs title insurance?

Without title insurance, you may not be fully protected against errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title. As a result, you may be held fully accountable for any prior liens, judgments or claims brought against your new property. If this should occur, your title policy insures that you will be defended at no cost against all covered claims up to the amount of the policy.
How much does title insurance cost?

The insurance commission approves and controls the premiums for title insurance policies. The premiums are paid only once and the cost depends upon the purchase price of the property and the policy amount must be equal to the purchase price.
What does title insurance protect from?
  • Fraud
  • Adverse possession
  • Rights of divorced parties
  • Deeds by minors
  • Undisclosed Heirs
  • Errors in tax records
  • False affidavits of death or heirshipProbate matters
  • Deeds and wills by persons of unsound mind
  • Conveyances by undisclosed divorced spouses
  • Forfeitures of real property due to criminal acts
  • Deeds by persons falsely representing their marital status
  • Documents executed by a revoked or expired Power of Attorney
  • Defective acknowledgements due to improper or expired notarization
  • Mistakes and omissions resulting in improper abstracting
  • Forged deeds, mortgages, wills, releases and other documents
  • False impersonation of the true land owner