l e g a l e a g l e s
Title Insurance “What is title insurance and do I really need it?” b y K i m b e r l y Wa t s o n S e w e l l a n d F r a n k l i n H . Wa t s o n
Questions and Answers… In every real estate transfer the matter of title examination invariably arises, and that is often followed by a question as to the need/nature of title insurance. “But I have a deed and a title search was originally conducted,” many people say, “isn’t that all I need?” No! A deed is not proof that the seller is actually the owner. Nor does it contain information regarding the rights others might have in the property, unpaid taxes, mortgages, easements, and restrictions. “Can’t I find out about their rights from the public records?” Yes, most of them. However, all of the necessary information is not contained in a single book, in a given office, or even in the same county. Add to this the possible errors in indexing, improper searching, and errors in examination; in other words, the human element and one can begin to realize the need. Besides, what is not in the public records is often what causes title trouble. What is meant by “Title”? “Title” is synonymous with legal ownership of prop- erty. It legitimates your right to “peaceful enjoyment” of the property you own, within restrictions or limitations of use imposed by covenants or government authorities. What is Title Insurance? Real estate title insurance, unlike most types of insurance, insures the property’s title for the time period extending backward in time from the date of the policy rather than forward, thereby protecting against losses arising from events which may have occurred prior to the date of the policy. The title insurance guarantees a buyer’s ownership and peaceful enjoyment against existing hidden claims, liens or judgments associated with a property after the purchase is completed. This means that when a buyer purchases real estate, a title insurance policy insures or otherwise guarantees that the buyer is protected if a hidden defect in the property title is subsequently discovered. Hidden risks such as those referenced below could potentially lead to a significant financial loss or actual loss of title to the property. Title insurance will pay for 100% of all expenses in defending you against any lawsuits attacking the title as insured, and will either “clear up” the title problems or pay the insured’s losses up to the amount of the policy. A One-Time Investment. Unlike hazard, flood, or casualty insurance, when you purchase a Title Insurance Policy, you pay a single,
giving warranties of title to the buyer, were the insured covenants with the buyer that not only has the insured not personally done anything to adversely affect the title being conveyed, but neither has anyone else who has ever owned the property, the owner’s coverage continues to
insure the owner regarding said warranties. How are Title Insurance Rates Set?
How title insurance premium rates are set varies from state to state. In some states rates are set by the title companies themselves and in others, such as Florida, the rates are set by the State Department of Insurance. For those states that set the rates such as Florida, each title company is required to charge the same for title insurance, and rates are promulgated based on the purchase price of the property. As such, when shopping title insurance in Florida, you will receive similar rates for title insurance from each company. Some HIDDEN RISKS that can cause a loss of title or create an encumbrance on title may include, any the following situations: • Seller purchased the property while committing mortgage fraud. • Seller or prior seller may have outstanding personal judgments which could attach to the property. • Forged or missing deeds, mortgages, satisfactions, or releases of mortgages and other instruments. • Invalid, suppressed, undisclosed, and errone- ous interpretation of wills or undisclosed or miss- ing heirs. • Liens from unpaid estate, inheritance, income, gift, and real estate taxes. • A judgment or levy upon which the title is dependent may be void or voidable on account of some defect in the legal proceeding. • A prior deed may be voidable because it was signed while the grantor was incompetent, a minor or in bankruptcy. • Outstanding prescriptive rights not of record and not disclosed. • Mistakes made during the examination of the title of the property.
Kimberly Watson Sewell and Frank Watson
one-time fee based on the value of the property being insured. Yet, the policy provides protection indefinitely remaining in effect as long as the insured has an inter- est in the property. If the insured should die, the cover- age automatically continues for the benefit of the insured’s heirs. Additionally, if the insured sells the property via a general warranty deed, which is typical, the insured is
For more information, please contact: Watson Sewell, PL (850) 231-3465 - www.watsonsewell.com
3 8 | T H E T H I R T Y - A R E V I E W | M A Y / J U N E 2 0 21
Made with FlippingBook - Online catalogs