A real estate agent, you are a trusted advisor who works to effectively and efficiently guide your clients through the home-buying process to a successful closing. However, as the closing transaction gets closer, the amount of paperwork and associated fees can be overwhelming to even the most experienced home buyer.
Among the more misunderstood areas of real estate transactions are questions about the need for and cost of title insurance. We take a look at some of the most frequently asked questions about title insurance to help understand the value of title insurance and the risks your clients may incur by foregoing it.
What is a title?
A title is a right to ownership of specific real estate property that includes the right of possession, right of exclusion, right of control, the right of enjoyment, and right of disposition. Titles can change hands through a will, court decree, law, or by selling the property. Any time a title is transferred it is recorded in a deed and filed with county clerks.
What is a title company?
A title company conducts a title search by looking at real estate records to find information about a specific property involved in a real estate transaction. The information may include the legal owner of the property, clients, judgments, and unpaid taxes. The title company will then complete a “commitment of title insurance” on behalf of either the lender or the buyer to ensure the buyer is receiving a clear title on the property and any outstanding issues are resolved.
What is home title insurance?
The home title insurance policy protects the homebuyer’s ownership rights as long as they—or their heirs— have an interest in the home. Just like a homeowner’s policy will protect against loss from theft or fire and wind damage, the home title insurance protects from hidden title hazards that threaten the owner’s financial investment in the home.
What is a title report?
The title report is prepared by the title company and discloses any information about easements, restrictions, ownership, and liens on the home.
Why do I need title insurance?
Title insurance protects you from these unforeseen legal and financial title discrepancies, as well as the costs, attorney’s fees, and expenses of defending against any matter insured by the policy. Likewise, title insurance can protect you from financial loss if the sale of your home falls through due to a covered defect in the property’s title.
How does title insurance protect your investment?
A title search does due diligence during any property transaction, but mistakes can be made and things can be missed. Oftentimes a home or piece of land has been owned by numerous people stretching back a century or more. Title insurance protects from possible errors, and from future claims or undiscovered interests. Such errors and claims might include forgery of deed documents, fraud, and mistakes in public records.
What is not covered under my title insurance policy?
This depends. As with any insurance, there are some risks that may not be covered under your policy. For example, this type of insurance does not protect you against anything found during an inspection of your property. Also, it does not insure against any title issues that you are already aware of.
What is the difference between an Owner’s Policy and a Lender’s Policy?
An Owner’s Policy is usually purchased by the home seller on behalf of the home buyer, while a lender’s policy is purchased by the homebuyer (i.e. mortgage borrower) on behalf of the mortgagee (i.e. mortgage lender) before the home loan is issued. Both types of title insurance policies ensure a clean and clear title, protecting the insured from the financial and legal burdens of unforeseen title issues.
Is title insurance necessary for a new home build?
The construction of a new home has the potential for exposure to unique pitfalls. Prior to your client, there were likely numerous owners of the unimproved land over the years who may seek to claim ownership rights. There is also the potential that the home’s builder failed to pay subcontractors or suppliers during the construction of your home, which could result in a lien being placed on the property.
In a highly competitive industry with all the pitfalls that can occur with financing, Ohio Real Title clearly stands out. We provide calm where sometimes it doesn’t exist because we believe everyone deserves an easy, successful transaction during a stressful time. This is who we are. Contact us today.