Banks are, once again, making real estate secured loans in Florida. Those in the industry will undoubtedly be aware of the fact that most lenders require a mortgagee title insurance policy to insure their mortgage lien on the collateral real property. As a result of the real estate collapse of the past several years, lenders have brought a significant number of claims under title policies and, in the process, they have learned some important facts about title insurance coverage. Here are a few things to keep in mind in that regard.
A title insurance policy does not necessarily insure that a title problem will be rectified. In fact, there are occasions where the title issue itself cannot be cleared. In those cases, the policy will generally provide payment for actual damages incurred (usually related to the diminution of the value of the insured interest) up to the amount of the policy.
Title policies provide that timely notice be given if a claim is being made. The policy terms will also provide the address to which notice must be sent. Any insured contemplating a claim should carefully review the policy terms to determine what is required in the way of notice.
Title insurance policies provide that the underwriter will retain and pay for legal counsel to represent the insured in resolving the claim. This is a significant benefit under the policy.
The title policy will have many items that are excluded from coverage. The first indication of these items will be provided to the lender as Exhibit B to the title insurance commitment. Careful review of Exhibit B is warranted as those items which cannot be cured prior to closing will ultimately be excluded from coverage under the final policy.