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Does Everyone Need Title Insurance?

Coral Springs Title Company Explains Insurance Policies

title companies coral springsAs an attorney owned and operated title company, we have seen many different types of clients over the years: young couples buying their first home together, established families looking to move to a larger home, seniors looking to downsize, homeowners looking to refinance their houses, and entrepreneurs developing new properties in Florida. We’ve also worked with realtors – helping them to secure sales by providing a thorough title search or legal advice.

One thing all of these people have in common – despite their different needs and goals – is title insurance. Clients often ask if title insurance is really necessary for every real estate transaction. The simple answer is yes! Anyone buying or developing a property should understand and purchase title insurance.

But how does title insurance vary in these different situations? In this post, we’ll look at some of the different scenarios in which clients need title insurance, and how those policies may differ.

Undeveloped Land
Experienced property moguls and developers know that title insurance is necessary, even for an undeveloped or vacant plot. There are a few simple reasons for this.

Even though there’s no construction on the land, the property itself could’ve changed hands over the years, leaving a defect in the chain of title. Without a thorough title search and insurance, undisclosed heirs or contenders for the title could come forward at a later stage.

Furthermore, vacant lots may also have other discoverable or hidden title hazards against them – liens, unsatisfied mortgages, zoning restrictions, or easements, for example.

Lastly, if you are borrowing money from a bank or mortgagee, the lender will insist that you take out lender’s title insurance to protect their interest in the property.

New Home
The same issues mentioned above apply to brand new homes. Just because nobody’s owned the house before you purchase it, doesn’t mean the property is free from potential title hazards!

Again, this is why it’s essential to have a professional survey and title search performed before buying a home or property. But title insurance is your extra coverage – a safety net, if you will – against hazards that cannot be found before the property transaction takes place.

For new housing developments, it’s also important to understand deed restrictions, as your plot was probably split off from a larger parcel of land. This could affect things like your property boundaries, permitted use of property, easements and road access, or limitations on pets and mobile homes on your property.

Refinancing may seem like a scenario where additional title insurance is unnecessary, but your bank will disagree.

Remember the two types of title insurance we mentioned? These are separate policies with different durations. Your homeowner’s policy lasts for as long as you hold the title to that property. The lender’s policy only covers your lender’s interest in your property only as long as the mortgage exists.

When you refinance, the lender sees this as a new loan that requires another lender’s title insurance policy. The old policy is terminated when the new policy takes effect. However, if you refinance through the same title company or mortgagee as your initial loan, you may receive a discounted re-issue rate.

Title insurance is always necessary. For more information about different title insurance policies for different properties, contact Florida Home Title Company in Coral Springs today.