Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. … There are two types of policies – owner and lender.
In Florida it varies per county and can be negotiated in the contract. Generally, the owner’s title insurance and the title/closing company in most Florida counties will be taken care of by the seller, while the loan policy is paid for by the borrower.
A valid owner’s policy will remain in effect for as long as you or your heirs own the property, whereas a valid loan policy is only in effect until full payment of the mortgage is made.
Title examination searches all public records in the county to provide a “clean” title upon conveyance.
- Historical deeds are examined to confirm a proper “chain of title”. This important step makes sure that each person before you had the legal right to sell the property. In this step the legal description of the property is verified on all previous transfers as well.
- The title examiner will review all recorded mortgages and other encumbrances. The title examiner will determine which documents have been satisfied and which ones are still outstanding. Before transferring title all encumbrances must be satisfied in a manner that is compliant with Florida’s Real Property Title laws.
- Some personal judgments can attach to property such as, delinquent child support, student loans and unpaid credit cards.
- Unrecorded liens are the most common. These liens include water bills, code violations, or any other lien that may not be recorded. The “Marketability” of title will be affected by these unrecorded liens.
A Closing Disclosure, or CD, is a form that provides details about the mortgage loan buyers have selected. Loan terms/mortgage costs, the purchase price for the home, how much one will pay in fees and other costs (closing costs), any prior deposits made, allocations between the buyer and seller for property taxes, condominium or homeowners association fees, credits from one party to another, and the costs for title services, title insurance and government recording and transfer charges will all be found on the Closing Disclosure. It is essentially the document that summarizes all the money connected to the home purchase between the buyer and seller.
Depending on the contract, time frames will vary. Closings involving cash can happen in as little as a few days, where as it can take 30-45 days for a closing involving a mortgage.
Types of Title Insurance Policies
There are 2 basic types of title insurance policies: an owner’s title insurance policy and a loan or lender’s policy. Under the terms of both types of policies, Scarab Title & Escrow Services, LLC. is obligated to pay any costs, attorney’s fees and expenses incurred in defending the title or the lien of the insured mortgage to the extent provided for in the conditions and stipulations.
The Owner’s Title Insurance Policy
Issuance of an owner’s policy typically occurs during the purchase of real property. The price of the policy is determined on the purchase amount of the real property being transferred. Issuance of an owner’s policy by Scarab Title & Escrow Services, LLC., essentially insures that the full bundle of rights is being given to the homeowner.
Coverage by this type of policy will remain in effect as long as the insured or their heirs retain the title to the described property. This is called having perpetual and indefinite liability. The coverage under the terms of an owner’s policy will not decrease over time.
What we insure:
- Title to the estate or interest described in schedule A (legal description) is not vested in a party other than the one stated in the policy – or – that the title belongs to the owner shown in the policy.
- Any defect in or lien or encumbrance on the title – or – that the search and examination are correct.
- Against the marketability of the title – or – that the title is so free from problems that a knowledgeable and prudent buyer would accept it.
- Against a lack of the right of access to and from the land – or – that the property has legal access.
The Lenders Title Insurance Policy
Protecting and securing the lenders rights in and to the property is completed by issuance of a loan or mortgage policy. The borrower or property owner is not covered by issuance of a lender’s title insurance policy. The lender’s policy coverage is in the amount of the loan or mortgage on the property. Therefore, as payments are made the debt decreases. In this case, the coverage amount aslo decreases. Scarab Title & Escrow Services, LLC. is giving financial protection or assurance as to the priority and enforceability of the mortgage by issuing this type of policy.
What we insure:
- That the lien of the covered mortgage is valid.
- Against the priority of any lien or encumbrance over the lien of the insured mortgage – or – that the lender has the lien priority that they want.
- Lack of priority of the lien of the insured mortgage over any statutory lien for services, labor, or material – or – against any unrecorded mechanic’s lien.
- Against the invalidity or unenforceability of any assignment of the insured mortgage – or – that the assignment of the mortgage is valid, if included in schedule A.
We utilize Westcor Land Title Insurance. Westcor holds an “A Prime” rating from Demotech, defining us as a company that “possesses unsurpassed financial stability related to maintaining positive surplus as regards to policyholders, regardless of the severity of a general economic downturn or deterioration in the insurance cycle.”