As you start getting quotes from Title companies in regard to the closing costs associated with selling your home, you might be asking yourself “What is this Owners Title Insurance Policy that I am paying for?” As a title company, that is one of the top questions that we get, so we decided to spend a little time and go over what title insurance is and why it is important in your transaction.
First thing is first- What is title insurance? The definition of title insurance is as follows; “Title insurance insures owners of real property, or lenders using real property as collateral, against loss arising out of defective or invalid titles and the existence of other liens or other legal claims against titles to real property. Title insurance can provide similar coverage regarding personal property.” While this can sound complicated, the broken down version is simply that title insurance protects you once you purchase the property (And the deed, title & possible mortgage are in your name) from previous liens and claims on the property from coming back and trying to force your hand to pay a certain amount of money or take part in a particular action. A more spelled-out version of what exactly is covered under title insurance can be found here.
Another question you might have is “Am I REQUIRED to get title insurance for the buyer of my property?” This is a great question, with a tricky answer. The first part is simply, no, you are not required to purchase this for the buyer. This is AS LONG AS the Florida Purchase Contract reads as the buyer paying for their OWN title insurance policy, and in return, they also get to select the title company. So if you want to select the title company, you will be paying for the owner’s title insurance policy on behalf of the buyer. The norm is that the seller typically pays for the owner’s title policy, but this can always be negotiated. A list can be found here which details which counties typically have the buyer pay!
Lastly, as always, if you have any questions about title insurance don’t hesitate to reach out!