Talking with an expert can really help.
If you’ve never purchased a home or other property before, the learning curve can seem overwhelmingly steep. There are forms to sign, authorizations to give, and a seemingly never ending list of questions to answer. Florida title insurance is one of those confusing elements of buying property, but it doesn’t have to remain a mystery.
The short explanation for why you need title insurance in Florida is that it protects you against a host of potential ownership problems related to the title search.
Before you ever sign on the dotted line to finalize a purchase, a title company performs a title search to rule out legal problems with the sale. The most obvious is if the person or entity selling the property doesn’t have the exclusive right to do so.
In those situations, the sale could be halted, or you, the buyer, could find yourself the proud new owner of property, plus problems inherited from the seller. In extreme circumstances, you could lose the property.
There are numerous potential situations where Florida title insurance can protect you. Here are 3 more common issues, and how Rand Title can help:
Reason #1: You Could Inherit Outstanding Liens or Judgments
If the property you want to purchase has an outstanding lien, such as an old tax debt, you could inherit the debt at the time of purchase. If there is a judgment lien against the property, Florida law states that the lien can stay connected to the property for 10 years, even if it is sold to someone else.
There may also be mechanics’ liens, which are debts secured against the property for construction or repair work that the seller did not pay for.
Reason #2: Undisclosed Heirs May Surface
All owners of the property should be disclosed prior to the purchase. But there are situations where the person or entity selling the property may not know about heirs with partial ownership rights. And in some unscrupulous circumstances, one owner may try to sell property while deliberately keeping other heirs in the dark.
If an heir emerges after the sale to claim partial ownership, you could find yourself in court to protect your interest. Worst case, you could lose the property.
Reason #3: An Incomplete Chain of Title May Conceal Another Owner
A title search partly involves searching property records to be sure there are no gaps or omissions. In Florida, the typical title search goes back to link each owner with the next for a 30 year period. If there is an owner within the last 30 years who is not disclosed in the title search, he or she may still have part legal ownership of the property.
This can happen if a husband and wife divorce, the wife keeps the house, but doesn’t realize that he needs to sign off when she sells it. As with a hidden heir, you could lose the property or incur other losses if another owner surfaces after the sale.
The purpose of a title search is to reveal essential information that proves the property is sellable. But no system is perfect, and omissions can happen. That’s where title insurance comes in.
Florida title insurance is loss protection for you and your lender if a problem with the title emerges after the sale is complete.
A lender’s policy protects the lender in case you lose the property due to a claim, and can’t make the mortgage payments. A buyer’s policy, which is separate, can cover your legal fees and other losses. As the buyer, you’ll be responsible for both.