- Can I purchase Title Insurance?
Yes. Most buyers leave it up to the real estate agent, lender or attorney, however, this may be a mistake. If the real estate agent, the lender, or the attorney owns a title agency then there could be a conflict of interest. In some states, attorneys can be dis-barred if they refer title insurance from their own law firm to their own title insurance agency. The Virginia State Bar Association considers it a conflict of interest. If the bar association considers it a "conflict", maybe you should consider using a neutral title insurance agent. If your real estate agent, lender or attorney owns a title agency, it is probably a good idea to get a (neutral) third party to act as the title insurance agent.
NOTE: Ask yourself: Do they have an interest in directing my business? Is it advantageous to them, are they making money from any other part of this transaction? If there is an issue that arises at settlement who does the settlement officer represent? Do they represent me, or do they represent the real estate agent that owns the company? (The same company that employs them.) When it is your money on the settlement table you had better be sure you know the answers.
- Can I shop for Title Insurance? Is it worth it?
Yes. Insurance premiums are the same for all title insurance agents in "rating bureau states", such as Pennsylvania and Virginia. To charge any other rate is a violation of law. However, there is some flexibility in title-related charges such as a settlement fee. Title insurance rating bureaus file for approval of a single rate schedule for all carriers throughout each state. The department of insurance in each state then approves the rates. Once this happens the rate is set and not negotiable. It is a good idea to shop the area where the property is located. Ask about notary fees, fed-ex fees, tax cert fees and closing fees. Recording fees vary from county to county.
- Do I need Title Insurance for a newly constructed home?
Title insurance insures the land that the new house sits on. Even if the house hasn't been occupied, the land has been sold and re-sold over many years. A title insurance policy insures your title to that piece of property. It insures your rights to the property. It insures that the builder has given you "free and clear" title to the property and that there are no easements or mechanics liens affecting your property that could hurt you at a later time.
- Does the lender's Title Insurance protect me?
No, the lender's policy insures only the lenders interest in your property. A lender's policy of title insurance protects the lender that financed your property. It insures them against a loss caused by defects in the owner's title. You would lose your equity if you did not have an Owner's Title Insurance policy.
- Does Title Insurance do anything for me?
The lender required insurance protects the lender up to the amount of the mortgage, but it doesn't protect your equity in the property. For that you need an owner's title policy for the purchase price of the home. The buyer must buy it as an add-on to the lender policy. It is advisable to do this because the additional cost above the lender policy is small.
- Doesn't a search of public records determine if there are defects with title to my property?
Sometimes, but not all defects are revealed by a search of the public records. If a problem arises which was the result of a mistake made during the search, or if a defect exists which is not of public record then your title policy reimburses any losses that you sustain.
- How does Title Insurance protect me?
An owner's title insurance policy protects a buyer against defects in the title of the property. It will provide coverage for either clearing the title problems or it will pay you for your losses. You pay a one-time premium at closing and an owner's title insurance policy remains in effect as long as you own the property. A title insurance policy insures the title to property for buyers and lenders. It provides protection from any loss arising from errors in the title search and examination and or recording of documents at the courthouse. It also allows for payment of your attorney's fees to clear any title defects that may arise.
- How is a title related to real estate?
First you must understand what the title is, only then, can you understand why you need title insurance. The title is the ownership of the property. It is a history of the property and it reflects previous deeds, mortgages, easements, judgments, and other possible liens, including rights or privileges previously granted to others. A past or present owner may have granted these rights. Such rights or privileges could include easements, licenses, rights of way, or mortgages.
If there is an issue with the title to the property, you may not be getting what you are paying for. You could lose your land. Unpaid taxes, for example, are a lien filed by the tax collector or tax claim bureau for unpaid taxes. If these taxes are from a tax period when a previous owner owned the property, you may still be responsible to pay them. Another example could be a roofer that put a roof on right before you purchased the property. They could make a claim against you because the previous owner did not pay. Someone who worked on the house, or any of countless other situations could cause a major problem. If a mortgage was not paid off at settlement you could have a real problem. Even if you know you are not responsible for the mortgage amount you still have to hire an attorney and pay the attorney's fees to prove you are right. This is why it's important to have title insurance!
Title insurance is insurance that protects you against unknown problems with your title. It protects you against losses you may suffer due to title problems such as mortgages, judgments, liens or other matters in the public record. A title insurance agent will perform a title search to determine what is on the public record that may affect your title. It will eliminate your risks caused by undisclosed title issues. The searcher will search the public records to trace the chain of title to your property. He/she will identify any outstanding claims or possible problems that could arise later. Once these problems have been eliminated then the title agent will issue a title insurance policy insuring that you have clear title to your property. Title insurance is a one-time fee for the policy. The policy is good as long as you own the property and will even protect you after you have sold the property.
Mortgage lenders always require a title insurance policy. A lender's policy protects the lender against any title defects that may negatively affect the lenders lien on a property. There are two types of title insurance policies. The first is the owner's policy. This guarantees that you own the property. The second is the lender's policy and this guarantees that the lender has a good lien on your property. This means if you sell the property you must pay off the lender. The lender's policy and the owner's policy are two separate policies. You pay a one-time premium for both. In other words you are not paying for two policies. An example would be: you buy a house for $410,000.00 and you borrow $250,000.00 from a mortgage lender; you pay for the $410,000.00 owners policy and the lenders policies is issued to the lender at no additional cost to you. The homebuyer usually pays the policies.
- How serious could a claim to my property be?
A claim could be very serious; you would be responsible for all legal fees and costs involved in defending your property. It could even result in the loss of all the equity in your property or worse, you could lose the entire property.
- Is purchasing Title Insurance obligatory?
All mortgage lenders require title insurance to cover the loan amount. It lasts until the loan is repaid. As with mortgage insurance, it protects the lender but you pay the premium, which is a single payment made upfront usually at the closing.
- Is Title Insurance a one time cost?
Yes, you pay it one time at closing. Then you're covered for as long as you own your home.
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