What Is Title Insurance?

Title insurance is an insurance policy issued by a title company. It protects you, the purchaser, against losses due to title defects which can affect the ownership of the real estate you are purchasing. Some of these defects are not easily discoverable and may only show up months or years after the purchase. An attack on your title can result in heavy litigation fees or even a total loss of your investment.

What Are Some of The Risks?

Some of the risks that can cause loss of title include:

• Forged legal documents such as deeds, releases, wills
• Deeds from minors or legally incompetent persons
• Deeds from dissolved corporations or companies
• Failure of spouses to join in conveyances of homestead property
• Liens for unpaid taxes including estate, inheritance, income or gift taxes
• Unprobated wills
• Undisclosed or missing heirs
• Mistakes in recording legal documents

How Does Title Insurance Protect Against These Risks?

The title policy guarantees that the title is free of defects on the day the deed was recorded with the County, transferring title in the name of the insured.

In case of an attack on your title, it is the title insurance company that will defend you in court. They will cover your attorney and court expenses or sometimes pay a loss caused by the defect in title up to the face amount of the policy subject to the terms listed in your policy.

Even after you sell the property, the policy will still protect you for defects occurring prior to your ownership that cause a loss to a purchaser if the title was warranted by you.

Are There Exceptions to the Title Policy?

Yes, each title policy has a section that lists exceptions that the title insurance company will not defend you against. Those are for example unknown or unrecorded document such as unrecorded deeds which the title insurance company would have had no way of knowing about when issuing the title insurance. There is usually also an exception for the exact boundaries of the land. That exception can be removed by ordering a survey.

How Much Does Title Insurance Cost?

In Florida, the premiums for the title insurance policies are regulated by the state. So, you are paying the same amount, no matter what title company you are using. You only pay the premium once at your purchase and it will protect you during your ownership of the property and even beyond. The cost of the title insurance depends upon the purchase price of the property. Your policy amount must be equal to the purchase price.

For a Homeowner Totle Insurance, the rates are

• $5.75 per $1,000 from $0 to $100,000
• Add $5.00 per $1,000 From $100,000 to $1 million
• Add $2.50 per $1,000 over $1 million to and up to $5 million
• Add $2.25 per $1,000 over $5 million and up to $10 million
• add $2.00 per $1,000 over $10 million
  
  

Example: Purchase price is $400,000. The rate will be $575.00 for the first $100,000 and $1,500 for the remaining $300,000 for a total of $2,075.00. Any Title Company in Florida should charge you this exact amount.

If there was title insurance issued for the property within the last 3 years of your purchase, a reduced re-issue rate can be used. This is why it is important to ask the seller if they had title insurance.

Please use our Closing Cost Calculator to estimate your closing costs. The Calculator will show you how much you will pay for you title insurance.

What types of policies are there?

There are two different types of title insurance policies that you need to be aware of in a typical residential real estate purchase:

1. Owner’s Title Insurance Policy
2. Mortgagee’s Title Insurance Policy

The Owner’s Title Insurance Policy is protecting you, the purchaser, from losses due to title defects as discussed above.

The Mortgagee’s Title Insurance Policy is protecting your lender from losses due to title defects, if you are financing the purchase of the property.

Lenders know about the risks of hidden title defect and will therefore require that a Mortgagee’s Title Insurance Policy is issued to protect their investment. It is important to understand that the Mortgagee’s Title Insurance Policy does not protect the Owner of the property. That’s why you, the purchaser, should always purchase an Owner’s Title Insurance Policy.

At Sunny Florida Title LLC, we will issue Warranty Deeds for the transfer of the property’s title. In order to issue the Warranty Deed, we require that an Owner’s Title Insurance Policy is purchased.

Typically, Title Agents will only charge a nominal fee to issue both policies simultaneously. At Sunny Florida Title LLC, we will charge the minimum fee of $25.00.