What is title?
Simply stated, the title to a piece of property is the evidence that the owner is in lawful possession of that property. In Florida the seller must convey marketable title to a purchaser.
What is title insurance?
Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or the defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.
How does title insurance differ from other types of insurance?
Insurance such as car, life, health, etc., protects against potential future events and is paid for with monthly or annual premiums. A title policy insures against events that occurred in the past of the real property and the people who owned it, for a one-time premium paid at the time of closing.
What does it cover?
Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy.
Who needs it? Purchasers and lenders need title insurance in order to be insured against various possible title defects. The buyer, seller and lender all benefit from the issuance of title insurance. In Michigan, the owner’s title insurance premium is customarily paid for by the seller as part of their closing costs. The mortgage or lender’s policy is paid for by the buyer and is included in their good faith estimate of closing costs.
How is a title policy created?
After the customer opens the title order, we begin a title search. A preliminary report or commitment to insure is issued to all parties of the purchase agreement for review and approval. At the closing, the title policy is created and given to the customer.
What is a closing?
Once the contingencies of the purchase contract have been satisfied, the closing documents are prepared for the closing. The parties then agree on a time and date to finish the transaction. Once at the appointment the documents are signed, monies collected and all items are disbursed. The seller gets any proceeds and the buyer gets title to the property (and usually the keys!).
What are the policy types?
A standard owner’s policy insures the new owner/homebuyer, and if the buyer/owner is getting a mortgage to finance the cost of purchasing the property; a lender’s policy insures the priority of the lender’s security interest.
What is escrow?
Escrow refers to the process in which the funds of a transaction (Earnest Money Deposit or Water Escrow) are held by a third party, usually the title company in the case of real estate, pending the fulfillment or closing of the transaction.
Professional Residential and Commercial Real Estate Closing Services in Orlando, Winter Park, Maitland, Longwood, Kissimmee, Orange County, Seminole County, Osceola County and the Central Florida Area. Call 407.985.1341 to see how we can help with your Commercial or Residential Real Estate Closing Attorney Oversight needs.
A sales contract is signed by the buyer and seller and delivered to the closing agent, usually with a deposit check. The escrow is accepted by the escrow agent, usually by written notation on the contract. The escrow agent starts the closing process by opening a title order. The file begins to be processed. Tax information, loan payoffs, survey (if necessary), homeowner/maintenance fees, inspections/reports, and hazard and other insurances as well as legal papers are ordered. A title search is ordered.
Title search and examination
This is a search made of the public records. Records searched include deeds, mortgages, paving assessments, liens, wills, divorce settlements and other documents affecting title to the property. Title examination is the examination of the documents found during the title search that affect the title to the property. This is when verification of the legal owner is made and the debts owed against the property are determined. Upon completion of the search and examination, a title commitment/preliminary report is prepared and reviewed and sent out to interested parties.
The closing agent reviews the new lender’s instructions/requirements, reviews instructions from other parties to the transaction, reviews legal and
loan documents, assembles charges, and prepares closing statements and schedules the closing.
Settlement/closing the transaction
Escrow/settlement agent oversees closing of the transaction. Seller signs the deed and closing affidavit. Buyer signs the new note and mortgage. The old loan is paid off. Seller, real estate professionals, attorneys and other parties present at the closing of the transaction are paid.
After the signing has been completed, the escrow/settlement agent will forward payment to any prior lender, and pay all parties who performed services in connection with your closing (if they have not been paid). The transaction documents are recorded in the county in which the property is located. Title insurance policies are prepared and sent to the new lender and to you. This all happens without any further actions by the buyer or seller.