Buying a new home is often an exciting journey to embark on, whether it is your first time, or you have been down this road many times before. You look forward to the final step – the close of escrow, or “closing” when you can take possession of the property and move in. That purchase is probably one of your biggest investments. All is well until an escrow officer calls to tell you there is a problem with the title.
If a title defect is located prior to the closing, you can review the concerns and may decide to proceed with the sale despite knowing there could be costly title issues down the road. You will also be given the option of canceling the purchase contract if you have discovered the title defect early enough.
If these title defects are not found before the close of escrow, a defect may be discovered or brought to light later, after you have lived in your new home for days, weeks, or even years. If you are protected through title insurance, the title company will be financially responsible for any costs that arise due to the defects in the title not disclosed to you prior to closing.
If you do not have title insurance, you risk personal liability for any costs related to the title defect, including the risk of losing your property.
At Cole Cobb, our real estate law attorneys can help you navigate through the often-complicated escrow closing process and explain to you the benefits of title insurance and the risks of declining it.
Overview of Title Insurance
When you buy a home in Florida, it is reasonable for you to believe that the seller has the right to sell it to you. You expect to receive a “free and clear” title to the
property. You assume that no one else can claim ownership and that you will be the sole property owner. End of story, right?
Unfortunately, it may not be the end of the story. The title search does not always find hidden errors or long-lost heirs. It can be costly for you if after closing, a problem arises with the title, and it turns out you do not own the property free and clear. Someone else has claimed ownership, or there is a past owner who never really paid off the mortgage or a judgment, there is an unpaid tax lien on the property, an adverse claim to ownership, or another type of defect has been found.
Title insurance can protect you from these claims. While it is not mandatory in Florida, lenders will require you to have it. If you pay cash for your new home, title insurance is not required. However, it’s highly recommended as protection against any claims you may encounter in the future. Remember the level of investment you are making.
The great thing about title insurance is you’ll pay a one-time premium for title insurance whether you are taking out a mortgage or paying cash for the home. A One-time payment for peace-of-mind and comfort, that protects you for as long as you or your heirs own the home and the land that comes with it.
Types of Defects That May Arise with the Title
There are quite a few issues that may arise making the title defective. Some examples are:
Errors were made previously in recording the legal documents. The names of parties in prior deeds may have been written incorrectly or the description of the home and property may be incorrect.
There may be signature forgeries.
There may be a claim against the property by someone other than the seller who claims to be the owner of the property or at least to have an ownership interest, such as an ex-spouse or an heir of a previous owner.
A fraudulent misrepresentation by the person you presume to be the owner, who really does not own the property.
There may be tax liens against the property.
There may be an easement or encroachment on the property that you were unaware of.
A legal judgment against a property owner may exist.
A mortgage that was not paid off and was discovered later.
Why You Need Title Insurance
If you have title insurance, the insurer will step up to protect you against covered claims. For example, you may discover there is an easement allowing others to cross your property or an heir of a former owner may suddenly file a claim alleging the property was left to them by the former owner’s will.
Just like car insurance policies, not all title insurance is alike. Consulting a real estate law attorney early in the process to review the title policy commitment, well before you close escrow, to be sure you understand all the terms, conditions, and policy exceptions and exclusions, is a wise decision to make to protect your investment.
Cobb Cole’s Real Estate Law Team Can Guide You Through Every Step of your Real Estate Transaction – from initial Contract Negotiation through to Recording Your Deed.
At Cobb Cole, with Board Certified Real Estate Law status, you will find many benefits to having our real estate attorneys help you at any stage of your real estate transaction. If you haven’t worked with us yet for your real estate purchase, NOW may be the ideal time to reach out. We can help you make sure gaining ownership of your new home is as pleasant as you hope for. For skilled, reliable assistance with your real estate transaction, schedule a consultation with a Cobb Cole real estate law attorney by calling 386-255-8171. Don’t let your questions go unanswered, make the call today.
