November 15th, 2019 2:16 PM by Jackie A. Graves, President
Shopping for title insurance may not be the most thrilling step
in buying a house, but it is one of the most important.
you can own a home, or "take title" to a property, most lenders will
require a title search of public property records to make sure there aren't any
issues in transferring the property into your name.
example, title issues can crop up due to liens on the property (say, from a
contractor who did work on the house but wasn't paid), unfulfilled financial
obligations such as unpaid taxes, or claims of ownership from a long-lost heir.
In such cases, a home seller may not have the legal right to transfer ownership
of the property.
protect against any financial loss, two types of
title insurance exist:
lender's title insurance and owner's title insurance. The lender's title
insurance policy pays for the expense of researching a claim and any court
costs incurred as a result of any disputes they uncover.
Owner’s title insurance, meanwhile, protects you as the
homeowner during any future disputes over ownership of the property.
require borrowers to purchase lender's title insurance. Owner's title
insurance, however, is optional—but, given the protections it provides, buying
it is a smart move. (Generally, home buyers use the same title insurance
company to purchase both policies.)
homeowner insurance, title insurance is taken care of as a one-time payment
that's made when (or shortly before) you close on your house.
we’ve got the basics of title insurance squared away, let’s look at some of the
more surprising questions you probably never thought to ask a title insurance
provider but totally should. After all, as the home buyer, it's your choice
which title company you decide to use.
this might seem like an obvious question, some home buyers forget to ask it.
And that can be a big mistake. Why? Because even though the average cost of
title insurance is around $1,000 per policy—which covers all upfront work and
ongoing legal and loss coverage—the price can vary widely, depending on where
you live and the price of your home.
states, including Texas and Florida, title insurance premiums are set by the
state, meaning that you’ll pay exactly the same amount no matter what title
insurance company you choose.
some states, like California and New Mexico, do not regulate title insurance
fees at all, and rates can vary widely from one title agency to another, says Rafael
Castellanos, a managing partner at Expert Title Insurance Agency in New York
City. If rates aren’t preset by the state, they’re negotiable.
advisable that all home buyers find out what a title insurance company's rates
are before they choose an insurance provider.
title searches are easier to clear than others. While there’s no telling how
difficult yours will be, you want a title company that can handle complicated
are issues that we run into on residential properties that can be complex, and
we have to go to great lengths to resolve them,” says Tim
Evans, owner of Evans Title Agency in
Ask how a
title company solved their most challenging title search, and you'll gain some
valuable insight—and some assurance that the company will be able to troubleshoot
issues during your title search if any should arise.
company's attorney is the person who is going to determine whether you can
legally take title of the property and receive title insurance. Using a title
company with a seasoned attorney, therefore, is crucial.
“in the early 2000s, it was very common to see people forming their own title
insurance agencies after just a few months,” Evans says. “Though that’s less
common today, you can still run into title attorneys who have very little
title searches can be complicated, claims are an inherent part of the business.
However, some title companies are more "liberal” than others, Castellanos
says, with respect to whom they will—and whom they won’t—issue title insurance.
title companies pay lots of claims, which can put a lot of stress on their
clients,” says Castellanos. “You want a title company that is incredibly
careful and conservative.”
many title claims are too many? Title
insurance claim rates are approximately 5%, according to industry estimates.
result, here's a good guideline: If a title company has had a lot of title claims
relative to the volume of their business—say, 1 out of every 10
customers—you'll want to continue your search.
on the terms of your home sales contract, you may be under a tight deadline to
reach settlement, warns Kimberly Sands, a
real estate broker in Carolina Beach, NC.
course, you won't know that until you actually make an offer on a house. But,
since it's a possibility, you'll want to find a title company that can conduct
a title search in a timely manner, Sands says.
the whole process takes about two weeks. If a title company says that it will
take significantly longer to complete a title search, using that company could
force you to delay closing, which could potentially cause your whole home
purchase to collapse.
being a member of a professional association certainly doesn’t guarantee that a
title company is good, title agencies that belong to industry groups are often
held to a higher standard, says Evans.
like the American Land Title Association (ALTA) also offer their members unique
education programs, business tools, and industry certifications that will serve
clients well. Moreover, membership in an industry group adds a layer of
credibility for an insurance provider.
insurance can be confusing for home buyers, but it’s an essential protection of
homeownership. So, in addition to asking the questions above, take time to read
online reviews and talk to your real estate agent
before picking your title insurance provider.
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