TITLE

TITLE COMPANIES &

TITLE INSURANCE

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WHAT IS A TITLE COMPANY?

A title company is a business that facilitates a real estate transaction. They represent both the buyer's interest and seller's interest and act as a neutral party.  

Here are some of the roles that a title company that a company does:

1. Provide a safe space for upfront monies to be held in trust, and are managed neutrally according to the terms of the real estate contract in the transaction.  
2. They hold on to all funds and act as a central "hub" in the transaction to all parties.
3. Provide notary services and provide a closing facility for closing.
4. Provide legal search & exam services, to ensure that the home has free & clear title and is legally ready for sale.
5. The provide title insurance to cover the lender and buyer of the home against title-related issues.
6. They collect all funds in the transaction, and pay out all funds when the transaction is concluded. (such as loan payoffs, seller proceeds, real estate commissions, state & local taxes, property taxes, homeowners and flood insurance premiums, survey fees, lender and broker fees, and much more)
7. The record the mortgage deed in county records

DO I NEED A TITLE COMPANY?  

A real estate transaction should include a title company, or a title law firm.

WHAT IS A TITLE POLICY?

A title policy is an insurance policy that protects the buyer and their lender against title-related legal issues.  This usually means things that have occurred in the past, such as mis-recorded deeds, title fraud, various legal/lien claims,  property disputes, tax liens, contractor liens and many more.  If the buyer and lender incur a financial loss due to an undiscovered lien, the policy helps mitigate some or all of the loss, up to the limits of the specific policy.

TITLE POLICIES:  There are 2 basic types of title policies:

1. LENDERS POLICYThe lenders policy is required by the mortgage lender, typically at the buyer's expense, and covers the lender's interest in the subject property for the home.  This coverage is required because the home itself is the collateral for the mortgage.
2. OWNERS POLICYThe owners policy protects the homeowners interest in the property. The policy is traditionally paid for by the seller of the home in most of Florida, with the exception of a few counties. Always refer to your real estate contract to see who is responsible for this cost.  If using the Florida BAR contract, this is located in Section 9(c).  NOTE: on new construction in the state of Florida, the buyer is responsible for both the cost of both policies.

WHO PAYS FOR THE TITLE INSURANCE POLICIES and SURVEY?

For most counties in the Florida, the buyer pays for the lender policy and the seller pays for the owners policy.  There a few counties in Florida where the buyer is responsible for both policy premiums.  If you're unsure, always refer to the contract or purchase agreement, which should make it clear. If your transaction is using the standard Florida Bar Contract, also known as the 'FAR-BAR" contract, this can be found in Section 9(c).

NOTE: If you are buying a new-construction home in Florida (one which has never been occupied or titled), then the buyer is traditionally responsible for paying both the owners and lenders policy premiums.

WHAT IS A FLORIDA FORM-9 ENDORSEMENT?

The Florida Form-9 endorsement is a policy rider (a type of amendment) to the standard title title insurance policy, and is required in the state of Florida.  It further clarifies the terms of the title policy specific to the boundaries of the lot and home that rests on the lot.  It requires a property survey of the home.    

WHAT IS A SURVEY?

A property survey, often referred to simply as a survey, is a legal drawing of the property lines and the home that rests on the lot. A survey shows the property lines, and legal easements such as utility easements and encroachments. Surveys are commonly mistaken for a Residential Real Estate Appraisal reports or a Home Inspection reports, but they are distinctly different.  

DISBURSEMENT:

THE FIDUCIARY RESPONSIBILITY OF THE TITLE COMPANY

When a real estate transaction begins, the title company takes on a role of financial trust--or fiduciary responsibility.  Funds are collected and kept in safe keeping according to strict legal and ethical standards, and according to the mutually agreed-upon terms of the purchase contract.  

When the transaction is concluded, the title company disburses (i.e. - pays out) all of the funds that were collected in the transaction the appropriate parties.  Every party who was entitled to receive funds in the transaction receives their due and it is spelled out in the final Closing Disclosure.  

Examples of items that occur after the transaction is concluded:

1. The buyer receives the keys to their home
2. The seller receives their net proceeds from the sale.
3. The previous mortgage company is paid the amount due
4. The real estate commissions are paid.
5. The new lender is paid their proceeds
6. Appraisers are paid any unpaid amounts
7. Survey companies are paid
8. Unpaid liens are paid to ensure clear title
9. The property taxes are collected and paid
10. The state transfer taxes (such as state deed stamps, intangible taxes and document stamps are paid)
11. The deed is recorded in public records with the county and the filing fees are paid  

Example Survey, highlighted to show property lines and home