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Frequently Asked Questions
about Title Insurance |
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What
is "title"? |
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What
is title insurance? |
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How
does title insurance differ from other kinds of insurance? |
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What
is a "Lender's Policy?" |
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What
is an "Owner’s Policy?" |
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What
is an "Endorsement?" |
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How
do I obtain title insurance? |
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What
is a title search? |
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What
happens if the title search reveals "defects" in the
title? |
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Are
there matters that wouldn't be revealed by a title search? |
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How
much does it cost? |
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How
long does my coverage last? |
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What
is "title"? |
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Title is another word for
"ownership" in real estate. It is the owner's right to use
and possess their property. |
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What
is title insurance? |
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Title insurance is an
insurance policy issued by a title insurance company to the buyer of
real estate and his or her lender. For a one-time premium paid on
the date of closing, it agrees to defend the title of the property
and to reimburse the owner or lender for any loss suffered up to the
policy limits because of any undiscovered defects in the title to
the property. |
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How
does title insurance differ from other kinds of insurance? |
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A common distinction made
is that most policies of insurance insure against some event that
may happen in the future, such as an accident, illness or death.
However, title insurance insures against events that happened in the
past. Another difference is that you only pay a premium once. |
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What
is a "Lender's Policy?" |
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A lender’s policy
protects the mortgage holder, if there is a title defect, the title
insurer will defend the lender in any litigation that may result and
will indemnify the lender in the event of a loss up to the original
amount of the loan. |
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What
is an "Owner’s Policy?" |
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A homeowner’s policy
protects the purchaser against a loss that may occur from a title
defect in your property the property. If there is a title defect,
the title insurer will defend the lender in any litigation that may
result and will indemnify the lender in the event of a loss up to
the original amount of the loan. |
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What
is an "Endorsement?" |
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An endorsement is an
additional insurance policy to cover a particular kind of loss. In
Florida, most lenders require a Form 8.1 Endorsement, a Form 9
Endorsement. |
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How
do I obtain title insurance? |
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Many companies and law
firms sell real estate title insurance in connection with performing
your real estate closing. You may purchase it through an attorney, a
title insurance agency or a branch office of the title insurance
underwriter itself. Be certain that the person you are working with
is well-established, and will be around if you have a question about
your closing or property in the future, and be sure that the
underwriter used by your title agent is a large, financially sound
insurer. |
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What
is a title search? |
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A title search is an
examination of the all of the transactions recorded in the public
records which affect a property. These will include deeds,
mortgages, liens, easements, covenants and restrictions, and other
documents recorded in the public records. In addition, there will be
an examination of the survey, taxes, special assessments and
condominium and homeowners association fees. The purpose of the
search is to discover any matters that could affect the value of the
property or subject the property owner or lender to litigation. |
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What
happens if the title search reveals "defects" in the
title? |
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Nearly every property will
have a "defect" of one kind or another. Most commonly, and
generally not considered defects, are homeowners association
documents, covenants and restrictions, and utility easements. These
matters will be listed as "exceptions" to the title
insurance policy, which means that the title insurer will not defend
or indemnify the policy holder for litigation or claims relating to
these matters. However, if there is a defect such as an unpaid
mortgage, a lien or a judgment, such matters must be resolved before
the closing can take place or the buyer does not have to close or
the bank my refuse to loan money on the property. The responsibility
for remedying the defects is on the seller. |
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Are
there matters that wouldn't be revealed by a title search? |
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Yes, and these are
commonly the issue of most title insurance claims: |
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| False impersonation
of the true owner of the property |
Deeds by minors |
| Forged deeds,
releases or wills |
Deeds by persons
supposedly single, but in fact married |
| Undisclosed or
missing heirs |
Liens for
unpaid estate, inheritance, gift taxes |
| Instruments executed
under invalid or expired power of attorney |
Fraud |
| Mistakes in
recording of legal documents |
Mistakes in prior
surveys or plats |
| Misinterpretation of
wills |
Mistakes in the
legal description of the property |
| Deeds by persons of
unsound mind |
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How
much does it cost? |
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In the State of Florida,
the Department of Insurance has specified the minimum amount that
may be charged for a title insurance policy. These the minimum
promulgated rates were established to ensure the financial soundness
of the title insurance underwriters, some of which in the past were
charging premiums much to low to enable them to cover their client’s
losses. A title agent or attorney may legally charge you more than
the minimum promulgated rates, however, at Gulf Title Company it is
our policy to always charge our clients the minimum promulgated
rates. |
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How
long does my coverage last? |
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For a one-time premium,
that you pay on the date you purchase your property, your title
insurance will remain in effect for as long as you own your
property. In addition, your coverage may last even after you sell
your property, for example, if you were to sell your property and
the buyer sues you because of a title defect, your policy will still
cover you for your legal expenses or losses up to the policy amount.
For such a low premium, title insurance adds a great deal of
security and peace of mind to property ownership. |
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