Title Insurance: Do I need it?

While most customers opt in for title insurance on many transactions, every now and then there is the question why get it? Many do not realize just how important title insurance is. If a buyer is obtaining a loan to purchase the property, they are required to purchase lender’s title insurance plus required endorsements; however, their policy is in fact optional. The good thing about purchasing both policies simultaneously is that the customer is typically only paying $25 more to insure themselves for any transactions where the loan amount doesn’t exceed the sales price. In the event the loan amount is higher, it’s typically pennies and dollars more to get owner’s title insurance.

The only time I have ever seen a true cost savings for customers to opt out of the owner’s title insurance policy is when they are putting a substantial down payment on the property, at that point they would in fact save money at closing but could potentially cost more money in the future should there be a title defect. In no way will the loan policy ever be in the benefit of the customer should they opt out of their own protection. This protection only benefits the lender, and typically is only ever used when the property is foreclosed on and a title defect is found. Another bonus to getting title insurance is it is a ONE time premium. The only time a customer would pay title insurance again on a property is if they refinanced and the new lender required title insurance for the new loan. Typically though, a re-issue credit discount can be offered for this new policy to the lender by providing the title company or attorney a sufficient copy of the owner’s policy. If a customer doesn’t get an owner’s policy at the time of purchase, and refinances later, they will not be qualified for the re-issue credit at the time of refinance, as this discount can only be issued with an owner’s title policy.

So what protection does this policy offer? An array of things, but here is a list of some of the most common:

  • Unpaid mortgage payoffs from the sale, or prior transactions.
  • Unpaid taxes.
  • Unpaid HOA dues/assessments.
  • Unpaid judgments/liens.
  • Prior owners still in ownership.
  • Potential probate issues from prior owners.
  • Incorrect legal descriptions in the chain of title.
  • Fraud.
  • Anything missed on the initial title search that would cause a future title defect.
  • Gap period between when the most recent title search/update was performed, and when the new documents are recorded from the transaction.

I tell customers all the time at closing that they are trusting human perfection to insure the proper procedures are completed, and since no human is perfect, human error is always a huge liability in any real estate transaction. If I forget to pay off a seller’s mortgage at closing, that mortgage could potentially foreclose on the property. This would pose a HUGE issue for both the buyer and seller. In the event a buyer does not purchase owner’s title insurance, they would have to hire their own attorney to defend their title. This could potentially be extremely costly, and much more out of pocket for the customer than it would have been had they bought owner’s title insurance at closing.

In my time at the title claims department, I have seen my share of crazy title issues. There have been sellers who have sold the property twice, and the first buyer never filed the deed with the courthouse showing transfer of ownership in public records. I have seen sellers refinance, or mortgage out their property the day before closing, then close and get a proceeds check knowing what had been done. I have seen tons of documents prepared incorrectly. And I have seen the honest mistakes of hard working title agents and attorneys who are overloaded and inadvertently miss things. Anything can happen, and wouldn’t you or your customer want some reassurance that errors will be fixed through the purchase of title insurance? It’s a small price to pay for peace of mind that you have clear, marketable title when you need it.

Author: Jessica E. Bennett, Licensed Title Agent

DISCLAIMER: The information provided in this article are for informational purposes only and not for the purpose of providing legal advise. The opinions expressed at or through this site are the opinions of the individual author, and may not reflect the opinions of the firm or any individual attorney.

Closing Time! But for how long…

Many times when wrapping up the signing portion of the closings, clients respond with “that’s it?!” thinking that they would be stuck at closing for hours upon end. While there was a time this was certainly the case, it hasn’t been this way in YEARS for a majority of the closings. Every now and then you may run into a bad walk through inspection right before closing that leads to issues and delays, but generally closings are 1 hour or less. So it led me to ask the question… do customers really know what to expect at the closing table? And to my surprise, most do NOT!

So let’s visualize together… it’s closing day, you are super excited to finally be a homeowner either for the first time or once again. You are dreading the daunting task of moving and unpacking, but smitten about your new digs to call home. How do I get the keys is obviously the first question? Well, it’s simple, you just come to a boring real estate office, sitting hours on end, signing your life away, and providing a blood sample at the end. Then, you get the keys! Not really, but it seems like a blood sample could be in order after all the hard work to get the loan has taken place. 😉

Actually, what happens at the closing table is the SIMPLEST part of your buying (or selling) experience. At our office, you are greeted with a warm smile, fresh cupcakes, and ice cold refreshments. Once all parties arrive, your closing agent will come into the conference room with a welcoming hello, and ask how excited is everyone. While the paper work stack can be thick, and your arm may hurt some after signing, it’s typically a quick and painless process. We review each of the documents presented, explain in layman terms what they are, and where you need to sign. While we provide a summary of each document to quickly disclose the main points, there is always room for questions and evaluation further by the clients.

We want everyone to feel comfortable with what they are signing, but relaxed and ready to close the transaction. The great thing about closings today is 95% of the documents the buyer has already seen through e-signing with their lender. The only “new” documents in the closing package to review are the: Note, Mortgage, First Payment Letter, Initial Escrow Disclosure, Amortization Schedule, and Title Co. docs (very minimal for most transaction). Everything else has been disclosed by the lender to get the loan approved, and the final docs only match the numbers previously disclosed in one form or another. We also encourage anyone who is nervous about signing, to let us know. We are happy to scan all of the documents before closing for review. It is much easier to address questions before closing than at the closing table.

While the thought of all these legal documents sound intimidating, they really shouldn’t be for any customers. Regulations have made closings way more streamlined for customers in that there aren’t any surprises or fine print to be on the lookout for. All those tricks have pretty much been eliminated in today’s closing world. And for the better, that is! The signing portion only takes about 20 minutes, give or take. Once everyone is signed, the closing agent will prepare a closing folder that includes copies of all the loan docs, and title docs associated with the transaction. This folder is a great place to store anything from the transaction (inspection reports, appraisals, etc.). The copy process only takes about 10 minutes, then the closing is complete. Most customers can plan to be in closing 30-45 minutes at minimum, but typically no longer than 1 hour. And voila! Keys can then be exchanged to the new proud owners.

After closing, the closing agent will file the deed and mortgage with the county courthouse, and type the title policy for the buyer and lender. The original deed and owner title policy are mailed out to the buyer, and the original mortgage and lender title policy are mailed to the lender. This typically takes about 4 weeks after closing. It is highly recommended that when these additional documents are received post-closing, they are also added to the closing folder for safekeeping. But never fear, your closing agent will always have copies of everything should you lose any documents! And the deed is public record, so it can be pulled online (free) or at the courthouse (a few bucks) any time!

And that’s it! All that anticipation for an easy 30 minutes of signing and finalizing. Closing day should be more about the excitement of moving and less about the dread of paper work! We encourage you to find a closing agent who is knowledgeable, and can make the closing experience smooth while still being able to understand what is being signed and why! Happy closing day, folks!

Author: Jessica E. Bennett, Licensed Title Agent

DISCLAIMER: The information provided in this article are for informational purposes only and not for the purpose of providing legal advise. The opinions expressed at or through this site are the opinions of the individual author, and may not reflect the opinions of the firm or any individual attorney.

Relationship Status: Single or Taken?

Often times at closings, customers giggle when reviewing their closing documents and see ‘a single person’; “well dang tell the world I am single, huh?” We all chuckle and move on to sign the remaining documents. While most people think this is giggle-worthy information, it is actually quite pertinent information in the state of Florida. In our share of closings, we have quickly realized how many people (lender, realtors, and customers alike) do not understand WHY we ask for marital status on transactions.

Well, I am here to tell you why: marital status is crucial when preparing real estate closing documents. Florida is a homestead state. That means spouses are protected under Florida homestead rights; which further means a property cannot be bought or sold without a spouses signature should the property be a primary residence.

So, if you are an agent who is working with a buyer to find the perfect dream home, it is important during the process to ask: 1. are you married or single? 2. If married, will you be using this property as a primary residence? 3. If yes, in Florida, spouses are required to execute the mortgage at closing, is your spouse able to attend closing to sign?

“WAIT A MINUTE, I am getting this loan by myself, married or not!” declares the buyer. And that is A-OK. The mortgage is NOT the obligation to repay the loan back to the lender. The mortgage is the security instrument that is filed as a lien on the property to secure the property as collateral to the Promissory Note. The Promissory Note is signed by the borrower only; while the Mortgage is executed by all borrowers AND non-borrowing spouses and/or title holders. We often find that many never realize there is a difference between a Note and a Mortgage. You can have only one borrower on a loan but that doesn’t perfect title when it comes to who will execute the mortgage.

If you have a buyer who further states “well I am married but haven’t seen my spouse in 20+ years”, I hate to be the bearer of bad news but this doesn’t exempt said spouse from executing the mortgage at closing. The estranged spouse will still need to either A. sign at closing or B. give a Power of Attorney to the buyer so docs can be signed on their behalf.

Their is no waiver of homestead. No form that can be signed to not require the spouse’s signature. The only way to bypass this requirement is to purchase the home A. with cash, or B. as a secondary or investment home with the lender. Let me repeat that: THERE IS NO WAY TO BYPASS REQUIRING THE SPOUSES SIGNATURE ON ANY PRIMARY RESIDENCES. I wish there was, as I know this has caused many of heartaches in the past. That is why it is so important to understand the need for marital status with real estate transactions.

In addition to confirming the details of the spouse, it is important to understand how the buyer can take title to the property at closing. If the buyer is putting the contract and loan in just their name, it is important to verify if they prefer to take title just like that or if they do in fact want their spouse added to the deed (title) as well. What’s the difference? Taking title individually is much different than as a married couple (joint tenants). In the event a buyer takes title individually, but is in fact married, and passes away; this causes the surviving spouse to go through probate to be determined as the rightful Heir to the property. However, if the buyer adds their spouse to the deed as a joint tenant, in the event one of the owners passes away, title would automatically pass to the surviving owner (spouse) once a death certificate is recorded in the public records, bypassing the need for probate on the subject property.

So that pretty much covers the buying side, but what about when the seller bought the property single and later married? Good question, I am so glad you asked! In the event that the seller has since married since obtaining ownership to the property, it is important to first ask: Is/Was this property both your primary residences? If YES, then the new spouse IS required to sign the Deed at closing relinquishing their rights to the property. Ideally, both parties should be on the contract and execute all the closing documents. Especially if this is a married couple who is together and selling the property together.

If the property was never occupied by the spouse as a primary residence, the title company or attorney can prepare a deed that states the property is not the homestead of the grantor and therefore not require the new spouse to sign any documentation at closing. Adding this clause to the deed is only recommended when the spouse has never occupied the property.

It is important that buyers and sellers understand the necessity and implications of the requirements when buying and selling. It is always strongly urged that parties seek legal advice when making decisions on who should be on title or why spouses are required to sign.

Author: Jessica E. Bennett, Licensed Title Agent

DISCLAIMER: The information provided in this article are for informational purposes only and not for the purpose of providing legal advise. The opinions expressed at or through this site are the opinions of the individual author, and may not reflect the opinions of the firm or any individual attorney.