What is Title Insurance?

Unlike other types of insurance that help cover future mishaps, title insurance is designed to protect the policyholder from any past title discrepancies from the seller or previous owner that might be uncovered during or after the purchasing process, protecting against claims questioning the legal ownership of a property.

Here are some of the more common title issues:

• Filing errors
• Unknown heirs to the estate who claim ownership
• Inconsistent or conflicting wills
• Liens, commonly from unpaid home equity lines of credit (HELOCs) or contractor bills
• Undocumented easements

There are two types of title insurance: owner’s title insurance and lender’s title insurance. Both provide similar protection, where they differ is WHO is covered.

An OWNER title policy protects the homeowner in case of any claims against ownership of the property and while not required, is highly encouraged. The cost is generally negotiated in the purchase price, paid by and collected from the seller at closing.

A LENDER title policy protects the financial institution providing the mortgage from title claims that would put their stake in the property at risk. The buyer/borrower is almost always is required to purchase a lender title policy as part of the lender’s closing requirements and is collected at closing.

The costs for title insurance are based on the purchase price and extent of coverage, being paid one time, at closing. All title companies in Florida are required to provide the same level of coverage at the same price.