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The Ins and Outs of Title Insurance


August 27, 2015

When a homeowner decides to buy or refinance a home chances are, they will have to get title insurance.  A two-part transaction, title insurance is a form of protection against a financial loss from defects in a title against the property and from any inaccuracies that might present themselves on a mortgage loan.  Formed in Pennsylvania in 1853, the first title insurance company, the Law of Property Assurance and Trust Society, set the precedence for all insurance policies issued.  Moreover, nearly all institutional lenders will require title insurance in order to protect the interest in the collateral of loans secured by real estate agents, additionally, buyers using cash to purchase a property, will also traditionally opt to go with a title insurance in order to protect their interest in the residence acquired.  There are two types of title insurance policies, and usually a homeowner will need both.  The first type is an owner’s policy that protects the owner’s financial interest in the property.  The second type is a lender’s policy that protects the lender.

The first step in acquiring a title insurance is for the mortgage company or the homeowner’s attorney to search all the property records pertaining to the property, to ensure that there are not any clerical errors, mistakes with the records filed, undisclosed heirs, omissions in deeds, unknown liens, or fraud involving the deed.  The purpose of this important step is to verify that the property is truly owned by the seller and that they have the authority to sell it.  Once that step is completed, the firm that started the initial search will contract an underwriting company to issue an insurance policy, with the basis being that the homebuyer will be defended in court if anyone challenges the title and/or to compensate the defending party of any equity they may lose.

Tim Allen a South Beach expert in Miami and Continuum condos for rent, brought this update to you.  To learn more about the Continuum condos for sale contact him at (305) 588 2451.