Understanding Florida Title Insurance

One of the services that we provide at Lynchard & Seely Attorneys at Law is providing title insurance. Many people struggle with what title insurance is and why you need it (or why your lender may be requiring it). Admittedly, there’s a lot to title insurance. That’s one of the reasons that it’s a highly-regulated industry – here in Florida, the title insurance industry is regulated by the Division of Insurance Agent and Agency Services. Our goal as licensed title insurers is to help you understand what you’re buying, why you need it, how you get title insurance, and how you use it in the event you need to make a claim.

What is Title Insurance?

Simply stated, title insurance is a specialized insurance policy that covers losses you might incur if someone is discovered to have rights superior to yours over your property. In other words, it protects you in the event that the person who sold you your property didn’t have full rights to sell it to you.

In your real estate transaction, you’ll most likely encounter two types of title insurance: owner’s title insurance and lender’s (or “loan policy”) title insurance. For purposes of this post we’ll be referring mostly to owner’s title insurance. The lender’s policy will cover many of the same things, only it protects your lender’s interest in the property rather than your own.

How Do You Obtain Title Insurance?

In your Florida real estate purchase contract, there will be a section dealing with obtaining title insurance. Under a law commonly referred to as RESPA, you as a buyer have the right to decide who will provide your title insurance, just the same as you can pick your car insurance. Choosing a licensed, highly recommended title insurer is important to ensure that they run a thorough title search and have the resources to provide the assistance needed in the event you have a claim. So, when you are making your offer, do your homework and pick a good title company such as Lynchard & Seely right from the start.

What Does Title Insurance Look Like and Cover?

Once you’ve chosen your title provider, they will do what is called a “search” or “examination” of title. This search should yield any documents, claims, liens, or information that is “on record” about the property. Items that are commonly found in the search include things such as past surveys, past deeds, liens that have been filed against the property, and/or homeowner association documents. You’ll be provided with these documents by the title company, and they are actually interesting to review! You can learn a lot about the property you’re purchasing by reading what the title company discovers.

These documents are provided for a couple of purposes: to make sure that the title company CAN insure the property, and to provide you with notice about known title records.

Once the search is complete, the title company decides what it can insure against. You will be presented with the title company’s preliminary report (also known as a “commitment.”). Read this carefully to understand what the title company is and is not willing to cover.  The items found in the search will be excepted from coverage, since all parties are aware of their existence. The purpose of the title insurance is to protect you against unknown issues.

You also have the right to seek Owner’s Extended Coverage, which we’ll get into in another post.

Who Pays for Title Insurance and

How Much Does Title Insurance Cost?

As with most items in a Florida real estate purchase, who pays for title insurance can be negotiated by the parties. Traditionally, the seller will pay for the owner’s title insurance policy, while the buyer will be responsible for paying for the lender’s policy. When you purchase title insurance in Florida, you pay a one-time premium that is set by law. If a prior owner’s title insurance policy exists, you may be eligible to obtain a reduced “reissue rate” title insurance policy. Either way, the one-time premium gets you a policy which stays in effect for as long as you or your heirs own the property.

How Do I Use Title Insurance?

The honest answer to this question is that hopefully you’ll never have to use your title insurance. But if, for example, you discover a boundary issue or some long-lost heirs of the former owner come forward saying they own your property, that’s your trigger to make a claim on your policy. Your title insurance policy should cover legal expenses for fighting these claims, as well as any monetary loss you incur as a result of the claims. Don’t wait too long to make a claim: the earlier the title insurance is involved the easier it will be on you.

Obtaining title insurance in Florida is just one piece of the puzzle of buying Florida real estate. We make title insurance easy at Lynchard & Seely Attorneys at Law. Contact us through our easy online scheduler to schedule a free initial consultation.  We proudly serve clients in the Pensacola, Pace, Milton, Gulf Breeze, Navarre, Fort Walton and Crestview areas.