Title Insurance Defined
A title is the foundation of real estate ownership and refers to your legal right to own, use, control, possess or dispose of the home. A Title Agent or Attorney issuing a title insurance policy will check for any defects in your title such as a lien by someone who worked on the property, unpaid taxes, an easement, an undisclosed claim from an heir of a previous owner or any number of other possible title defects. Your ownership could be jeopardized if there are any problems with the title.
Title insurance helps protect you or your lender from prior rights or claims that other parties may have to the property, as well as from any outstanding debts of previous property owners. Title insurance is based upon a public records search, which is evaluated to determine the state of the title at the time of your purchase. In the event that someone challenges your title, the title insurance underwriter (not the title agent or agency) will defend your title and pay all related costs and loss in property value that might ensue, up to the limit of your policy.
Explanation of Insurances
There are two primary types of title insurance—a lender’s policy and an owner’s policy. Your lender may require its own title insurance as a condition of your mortgage loan. A lender’s policy insures the lender’s interest in the title to your home. An owner’s policy will insure you as the property owner against the specific kinds of claims listed in the policy. The owner’s policy helps protect the new property owner from a previous owner’s debts, such as being required to pay a lien placed against the property due to the actions or inactions of a prior owner.
In Florida, the buyer or seller may purchase both the lender’s policy and the owner’s policy depending on negotiation of your contract. But, unlike other types of insurance, you pay a one-time premium for your title policy, which remains in effect for as long as you or any heirs own the property.