Title Insurance
Title insurance protects buyers and lenders against defects in the title of the property and against the property.
Most lenders require you to obtain title insurance to protect the lender, called a Lenders Policy,” as a condition of the lender providing the money necessary to buy a home or property. You, as the owner may also purchase an “Owner’s Policy” to protect your interest. Claims occur rarely, but when they do, they can be devastating to an uninsured owner. You can usually save money by purchasing the Owner’s Policy at the same time the Lender’s Policy is purchased.
Although the lender has the right to approve who provides the title insurance, the seller cannot require you to purchase title insurance from any particular title company, as a condition of the sale.
Frequently Asked Questions about Title Insurance:
Who usually pays for the title insurance?
In some areas, sellers pay for the coverage to guarantee that they are providing a marketable title. In other areas, buyers are expected to pay for the coverage as a cost of obtaining their mortgage loan.
If you are in an area where the buyer traditionally pays for the title insurance, you can ask the seller to provide it. Your agent can include language to this effect in your offer to purchase the property.
How do I purchase title insurance?
Normally, the real estate contract specifies which title insurance company will write the policy. In some states, the cost of title insurance is highly regulated. In other areas, there is little regulation and it pays to shop for the best deal. At The Buyer’s Agent of Nashville & Middle Tennessee your agent will help you shop for the best price on title insurance. We do the work, you make the decisions and you save time, money, and effort!
Do you recommend any one title insurance company over another one?
No. You may, however, have less risk when dealing with national firms because they generally have much larger reserves.
Are there any special riders that I should ask for from the title insurance company?
You may want something in writing outlining how much discount may be achieved if future buyers of your home purchase their title insurance through the same company if you refinance your existing mortgage.
What does title insurance actually cover?
Title insurance protects you from prior claims of record, and some claims not of record, against the property. For example, material liens may be placed against a newly constructed home.
There may have been a death in the family of a former owner and an heir might come forth claiming an interest in the home or property. There could be a problem with the survey that the title insurance company would need to address such as an encroachment by the neighbor on the property, for example, a fence placed over the boundary line. All of these issues must be addresses before the closing can occur.
How does this work?
The lender or the closing authority will order the title work done by the named title insurance company. A document called a binder and the survey will be delivered to the closing authority. The closing authority will read any stipulations the title insurance company has placed on the title insurance policy and will review the surveyor’s notes and drawings of the subject property to make certain there are no encroachments. If everything is in order, the transaction will move forward to closing.
What if there is a problem?
The closing authority will notify all parties involved: your agent, the seller, the seller’s agent, and the lender. The closing on the purchase of the home or property comes to a halt until the problem is resolved. If there is no way to resolve the problem, the sale does not happen. It is not unusual for a problem to arise, but most of them are corrected.
Remember an agent of The Buyer’s Agent of Nashville & Middle Tennessee agrees to work to protect your interest in the entire real estate transaction – from finding the home or property, to helping you acquire your loan, to helping you choose a title company.