Title insurance comes in two basic forms. The first one is the policy for lender also known as loan policy and policies to the buyer. Most lenders require borrowers to get this policy to protect the property interests of the mortgage lender, which usually decreases over time. Buyer policies safeguard the interests of the buyer, which increase with time.
Lender policy remains in force throughout the mortgage loan or until the mortgage is refinanced from the initial point where a new lender policy is issued. Buyer policies remain in effect for as long as the buyer retains an interest in the property.
Coverage of Title Insurance
Most other forms of insurance such as an automobile, medical and life insurance provide financial protection against future losses from damage, theft and other risks. Instead, much of the cost of title insurance in Jacksonville, FL is intended for past problems with the potential to negatively affect the current policyholder. The cost is also for professional work necessary to discover and rectify these problems before they cause financial losses.
Cost Involved In Title Search
Although title insurance policies vary from state to state and from vendor to vendor, the fee always cover the cost of performing a title search. A title search is a thorough analysis of the relevant public records to determine if there is a problem with the title. These files typically are in the city or county where the property is located.
Ideally, a title search checks the entire history of the property, dating back to the plot or the original subdivision. This task is usually done searching extract property – a document containing the complete chain owners and historical charges. However, since the extracts may be incomplete or contain inaccurate information, a full title search usually takes into account other possible sources of reliable information, such as local tax records, wills owners and previous court rulings applicable.
Remedy or Troubleshooting
Real estate closing solutions also include the cost of resolution also known as a remedy for most small problems also called defects that were not discovered during the title search. Typical defects include, but are not limited to the following:
- tax liens (unpaid taxes)
- builders liens, also known as mechanics liens for unpaid bills on construction or renovation
- Lien creditor (e.g., an outstanding balance on an existing mortgage)
- judgments lien, for example, a post-divorce judgment awarding of the property to a former spouse.
Note that if the title search discovers unresolvable title issues such as proof that the property is entirely owned by a third party and therefore cannot be sold by the current seller, the lender will most likely refuse to issue a mortgage on the real estate and the buyer may be forced to terminate the transaction. Other issues such as an ineligible party (for example a minor) was involved in a previous sale, one or more instruments of transfer were falsified, or that there is no right of access to land, will also lead the termination of the sale.
Legal costs and compensation for loss
Finally, title insurance policy will cover future costs due to disputes over the title. For example, the holder of an insurance policy with the valid title would not have to pay out of pocket to defend against a lawsuit filed by contractors who claim that their companies had liens on the property because the receipt of renewal is not paid by the previous owner.
In the relatively unusual case that a court determines that the most recent transfer of property is invalid, the policy also compensates the policyholder for any loss of equity in the property. Such instance for example, if it is discovered that a previous owner transferred ownership to a third party in an undiscovered testament so far. The limit of coverage of a title insurance policy is equal to the estimated value of the property at the time when the policy was issued unless the policyholder to acquire additional coverage.