GULF TITLE COMPANY
2721 Gulf Breeze Pkwy
Gulf Breeze, FL 32563
(850) 934-9000
gtc@gulftitlecompany.com
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Why
Do You Need Title Insurance? |
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New home buyers, and even
some experienced buyers, are confused by real estate title
insurance. They wonder, is it required? Is it something I really
need? How much does it cost? What exactly does it insure?
Most people consider it like an extended warranty, something that is
sold to them but will probably be of no use in the future. |
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The first thing you should know is no commercial lender doing business in this state, will give you a
loan on your property without receiving a title insurance policy to
protect their mortgage. Why? Because for the small cost of a title
insurance policy, the title underwriter will defend any lawsuit
affecting a covered title defect and will indemnify the lender for
any covered financial loss they may incur. This fact alone should be
influential in convincing homebuyers of the value of title
insurance. |
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Even if your home is
brand new, sits in a well-developed subdivision, is sold by a
reputable developer and has a flawless survey, there could be a
title defect on the property which could be very expensive to defend
or correct and could even cause you to lose your home. |
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Why? The
best way to explain, is to give you an example of an actual case.
Two well-established subdivisions lay side-by-side, with an unpaved
public road lying between them. The right-of-way dedicated by the
subdivision was sixty feet wide, and the government wanted to pave
the road. When it began clearing vegetation to prepare for the
paving, the property owners on the east side were stunned to see the
front ten feet of their property being lopped off, including the
survey markers showing the front boundary line of their properties.
Each owner had a survey showing their property extended 10 feet into
the land the government claimed they owned. |
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How could this happen?
Land in Florida was divided by the government into Sections, Ranges
and Townships in the 1820s. A Section is typically supposed to be
one square mile. However, when the Section lines were drawn, an
error was made, and the Section was 10 feet too narrow. One
developer later purchased the East ¼ of the Section, another
purchased the West ¾ of the Section. When each developer platted
their subdivisions, one began its measurements from the East Section
line, the other made its measurements from the West Section line. No
one knew that the subdivisions overlapped by 10 feet in the center,
because there was a narrow dirt road lying between them. It didn’t
occur to anyone that the dirt road owned by the government was in
fact, 10 feet wider than what it appeared to be until the government
attempted to pave it. It took 175 years to determine there was a
title defect! |
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The case went into
litigation, and the owners of 24 homes had to decide whether to let
the matter go, or hire an attorney in an attempt to keep the land
they believed had purchased. The owners who had title insurance on
their property were defended by attorneys who were hired by their
title insurance underwriters, and were compensated for the appraised
value of the land they lost because of the title defect. |
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This may sound like an
unusual occurrence, but consider that the original government survey
of the State of Florida was made in the 1820s. Those surveyors had
weather, swamp, alligators, mosquitos, and even unfriendly indians
to contend with. It is therefore not unusual to discover
discrepancies in the original government survey, as well as other
mistakes made in the 180 years to follow. |
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Survey problems aren’t
the title problems that could affect an owner’s property.
Following is a list of issues that are commonly indemnified by title
insurance underwriters: |
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In addition, and this
point can’t be emphasized enough, the title insurance process
itself my reveal a title defect before the closing and save the
purchaser from the headache of having to deal with the matter
latter. When you agree to purchase title insurance, the title agent
will perform a title search to review all of the transactions in the
public records which may affect the property. This search will
immediately reveal problems such as unpaid real estate taxes, unpaid
homeowners association fees, a lien against the property, a judgment
against the owner, or a mortgage that was never paid off. The title
agent will also review the survey of the property to determine
whether there are any matters on the survey which may affect the
value of the property. The seller of the property will then be
required to remedy the title problem prior to the sale of the
property, or the owner may elect to continue with the sale (with
these matters excluded from coverage under the title insurance
policy). |
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Any way you look at
it, the benefits you receive by purchasing a title insurance policy
are worth the additional closing expense. If you are receiving a
loan to purchase your home, you will be purchasing a lender’s
title insurance policy anyway, and the cost of the additional owner’s
policy is negligible. Click
here for an illustration. Why not have the
peace of mind of an insured real estate closing? |
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