Florida title insurance can be a saving grace for homebuyers and real estate investors, but unfortunately, it’s something that many Floridians are unfamiliar with. That’s why today, we’re taking a look at Florida title insurance in detail and answering some of your most frequently asked questions.
What is Florida Title Insurance?
Florida title insurance is insurance that insures your title to real estate. What does that mean? Let’s look at an example to make it a little easier to understand.
You are interested in buying a new home located at 12 Bird Street.
The owner of the home who currently lives there put their home on the market a month ago.
Twelve months ago, however, the owner of the home hired a contractor to come in and do some repair work. When that repair work was finished, the contractor gave the bill to the homeowner and the homeowner said they would pay it on Friday.
Time drags on and the homeowner simply doesn’t pay the contractor for the work that they have done.
Thirty days later, the contractor files a verified complaint against the homeowner.
If the outstanding bill goes unpaid, an evidentiary hearing is held. If the allegations of non-payment by the homeowner are proven, the contractor may file a lien against the homeowner’s property.
A lien is a way for the contractor to collect the money owed to them because it means that there is a public record that the homeowner owes this money to the contractor. A home with a lien against it may not be sold or refinanced until that lien has been cleared. Essentially, the contractor becomes a “part owner” of the home.
Now, being someone who is interested in buying the house, you may not know that the home has a lien against it. The lien holder (the contractor) may also be unaware that the house is being sold.
The lien may then remain attached to the house when you purchase it.
How Does Florida Title Insurance Work?
When you have title insurance it ensures that you are notified of any liens on a property that you are thinking about purchasing, but that your title and possession of your property are protected against any undiscovered claims in the future.
Buying Florida title insurance requires a one-time premium payment and then the insurance remains in effect for the length of time that you own your home.
Who Pays For Title Insurance?
In MOST instances, the individual buying the home purchases the title insurance policy, but the seller of the home pays for a title search on the home.
Is Title Insurance Mandatory?
Homeowners are not required to get a homeowners title insurance policy, it is completely optional. That said, it is to your benefit to invest in a homeowners title insurance policy to protect your equity in your home.
What is “Re-Issue Credit”?
When buying a title insurance policy, if it can be proven that a previous title insurance policy existed on the property, the buyer can usually claim a “re-issue” credit. A “re-issue credit” is a discounted rate on the title insurance policy based on the fact that the property is a safer investment for the title insurance company because it was previously covered.
There is some small print when it comes to re-issue credits, however. A copy of the title insurance policy in the name of the seller OR the borrower if the home is being refinanced must be presented in addition to…
a) Policies on real property that is unimproved where the owner’s title has been insured before the application for the new policy.
b) Policies issued with an effective date LESS THAN three years after the effective date of the policy involved in the current transaction.
c) Loan policies that have been issued with the refinancing of the property that was insured by the original owner’s policy that insured the title of the current mortgagor.
What Are Some Common Title Insurance Legal Disputes?
Title insurance legal disputes happen quite frequently and have various subjects, these include:
Marketable Title Disputes: These types of disputes center on the definition of a “marketable title” or whether the chain of ownership of the title is clear and free from liens or debts etc.
Insurable Title Disputes: Insurable title disputes refer to disputes that center on titles that have known defects in the title, but the title insurance company has agreed to insure the property against the defects ever affecting the value of the property or the ownership of the property.
Limitations of Owner’s Rights Disputes: Disputes centering on limitations of owners rights puts the burden of finding defects in a real estate title on the buyer even if sellers provide a written statement disclosing any defects in the title.
Named Beneficiaries Disputes: Named beneficiaries disputes are centered on who is covered by the title insurance policy. For example, if an individual passes away and the home is willed to an heir, does the title insurance policy cover the heir as well as the original owner?
As a home buyer, you are covered in the case of these types of disputes when you invest in a title insurance policy. If you are the seller of the home, you need to retain a real estate attorney to represent your best interests when selling your home.
Interested in Learning More About Florida Title Insurance?
If you’re interested in learning more about Florida title insurance or if you are facing litigation related to your Florida title insurance policy or real estate purchase or sale, Weidner Law can help. Pick up the phone and dial 727-954-8752 to get St. Petersburg, Florida’s most experienced real estate attorneys on your side.