Florida Title Insurance Frequently Asked Questions
What is the purpose of title insurance?
Title insurance insures against financial loss from defects in title to real property. Similar to fire insurance, it protects an owner or a lender against claims against the land. Title insurance was first developed in 1850 in Pennsylvania to protect buyers and lenders from defective property rights. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.
What are some common title problems and why do I need title insurance?
- Fraud & forgery
- Conflicting wills
- Missing heirs
- Incorrectly executed deeds by minors, corporations, heirs or non-entities
- The seller has fraudulently sold the property to another recent buyer
- A prior seller has fraudulently sold the property to more than one buyer
- The seller purchased the property while committing mortgage fraud
- The boundaries may be incorrect and part of the property may actually be owned by an adjacent neighboring property owner
- There may be an easement burdening the property which limits the uses and thereby decreases the value of the property
- Structures on the property may encroach onto valid easements or an adjacent property
- There may be an older unrecorded deed transferring the property which is now recorded
- The seller or prior seller may have outstanding personal judgments which could attach to the property
- Foreclosure sale issues
What does a title company do?
The title company handles the title search and escrow aspects of the transaction. They coordinate and act as the center point for the closing for buyers, sellers, lenders, realtors and third parties such as surveyors, insurance companies, and inspectors. Prior to closing, they put together all the pieces of the puzzle with the primary objective being to clear title and make sure all judgments, liens, and encumbrances are satisfied at closing. The title company also prepares all closing documents including the CD 1 (closing statement), loan documents, and any other legal documents related to the closing. Finally, buyers and sellers usually gather at the title company’s office to sign and notarize all their documents. Here are some of the tasks a title company customarily handles:
- Order title search
- Title Examination by attorney or title agent
- Tax search
- Order mortgage payoffs
- Order the Homeowner/Condominium Association maintenance and special assessment information
- Pay property taxes at closing
- Check for municipal liens (liens by cities and counties)
- Check for code violations
- Check for open permits
- Prepare loan and mortgage documents (for loan transactions)
- Prepare Closing Disclosure or HUD (cash or commercial deals only) as per lender’s instructions
- Pay off all mortgages, liens, judgments, and HOA dues
- Disburse funds to sellers, lenders, realtors, HOAs, cities, and others
- Record the deed and mortgage and all other necessary documents with the Clerk of the Court
- Issue owner’s title insurance policy (approximately 4-8 weeks after closing)
What is an escrow agent?
An escrow agent holds funds “in trust” for a transaction. The funds can be held for a buyer, a seller or a lender. Escrow agents are required to be bonded and insured in most states. Verify your escrow agent’s licensing credentials in your state before giving them any funds.
Who pays for closing costs?
Buyers and sellers each have separate closing costs related to their transaction. The contract language customarily determines who pays for what costs such as title insurance, lien search, title search and deed taxes on the sale. Buyers customarily pay for their loan related expenses with the exception of some VA or FHA loans. Regions within each state usually have established “customs” for cost allocations, but buyers and sellers should not assume anything and carefully read the contract.
What are settlement charges?
Settlement charges are all the closing costs you will have for your closing and will be itemized on the Closing Disclosure early on in the loan process and then again three days before closing as per law.
What is the Truth-In-Lending Disclosure?
A Truth-in-Lending Disclosure Statement provides information about the costs of your credit. Effective October 3, 2015, for most kinds of mortgage loans a new form called the Loan Estimate replaces the initial Truth-in-Lending disclosure, and a Closing Disclosure replaces the final Truth-in-Lending disclosure.
Why does a buyer or a lender need Florida title insurance?
When you purchase your home, how can you be sure that there are no problems with the home’s title and that the seller really owns the property? Problems with the title can limit your use and enjoyment of the property, as well as bring financial loss. A title search and the one-time expense of title insurance prevents these issues.
Do I need an attorney for my closing?
Not normally. Any licensed title agency is permitted to close and issue Florida Title insurance in the State of Florida. But our company is owned and operated by an attorney, so you get the benefit of legal oversight of your file at no additional charge. Some states are known as “attorney states” and do require all real estate transactions to be closed by an attorney. Check your state’s laws.
Will I be charged attorney fees?
No, not unless you reach a separate agreement with an attorney for additional services such as a corporate formation or other legal matters you need assistance with.
How long does the title process take?
The title due diligence takes about an average of 7-10 business days. However, closings can be expedited if all parties cooperate. The average closing takes about 30-45 calendar days due to loan approval timelines. Your contract will specify your closing deadlines.
Who will schedule my closing?
The closing will be scheduled by the title company in coordination with your lender, if applicable.
When do I pay for these title services?
Customarily, all the fees and title insurance are paid at the closing.
What is a Closing Disclosure?
A Closing Disclosure (also known as a “CD”) is a standard, government-regulated form that was implemented on 10/1/15 and is used to explain to buyers, borrowers, and sellers all the financial details of their transaction. A CD itemizes every single financial item in a transaction such as sales price, loan amount, seller credits, prorated property taxes, realtor commission, loan fees, points, closing costs, title insurance fees, HOA dues paid, etc. The CD is strictly regulated by the Federal Consumer Financial Protection Bureau (CFPB) .
What is a mortgage closing statement?
This is now the same as the Closing Disclosure. It itemizes all the closing costs for a buyer/borrower.
What is a HUD?
The HUD was the closing form formerly used on loan transactions prior to 10/1/15. The HUD was replaced by the Closing Disclosure and is now primarily used for commercial, cash or private loan closings.
What does “GFE” mean?
GFE is often used to describe the loan estimate a lender will provide you when you request a quote for your loan which will often include all your customary closings costs including loan, title and recording charges.
Why do I need a survey?
A survey establishes the property boundaries (shape and size) of the property you intend to purchase, it reveals encroachments and easements on the property (if any exist) and it also provides information on the access to your property (i.e. driveway). A survey is certified to the buyer, the title company, and the lender (when applicable). If you waive your right to a survey (option for cash buyers only), you have no recourse against the title insurance for survey matters.
Why do I need title insurance for my refinance?
The borrower/owner does not actually need title insurance, but the lender who is giving the new loan, does want their loan secured through what is known as “lender’s title insurance.” A borrower who already paid for an Owner’s Title Insurance Policy when they purchased the property is entitled by law to what is commonly referred to as a “reissue rate” or “reissue credit.” For example, an owner who originally bought his house for $100,000 and is doing a refinance for the balance of $80,000 will be entitled to the following discount:
|Lender’s title insurance||$460.00||based on $80,000 new loan|
|Reissue discount||-$245.00||based on an Owners Title Policy of $100,000|
|Discounted title insurance rate =||$215.00|
Is Florida title insurance a one-time expense?
Yes, this is a one-time expense but protects your title to the house for as long as you own the house.
What does title insurance cost?
Florida title insurance rates are set by the Florida Department of Insurance. A Florida title insurance owner’s policy and a Florida title insurance mortgagee policy are generally issued simultaneously, with the policy of lesser value having only a nominal premium rate. The scale of Florida title insurance rate premiums is as follows based on the insurance amount:
- Up to $100,000.00 a rate of $5.57 per $1,000.00 of insurance;
- Over $100,000.00 up to $1 Million a rate of $5.00 per $1,000.00 of insurance;
- Over $1 Million up to $5 Million, a rate of $2.50 per $1,000.00 of insurance;
- Over $5 Million up to $10 Million, a rate of $2.25 per $1,000.00 of insurance;
- Over $10 Million, a rate of 2.00 per $1,000.00 of insurance.
Use our title insurance calculator to determine your rate.
When will I receive my original warranty deed and owners title insurance policy?
About 3-8 weeks after closing depending on how long the county’s recording clerk takes to register the documents.
What is FIRPTA?
FIRPTA stands for the Foreign Investment in Real Property Tax Act. Foreign national sellers have specific requirements that apply to them when selling US real property. If a seller is not a USA citizen or resident, FIRPTA requires a prepayment to the Internal Revenue Service of a withholding tax on the real property. The amount required to be collected at closing is calculated as a percentage. Generally, 15% of the gross sales price must be withheld and remitted to the Internal Revenue Service (IRS) within 21 days of closing unless certain conditions apply.