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Title Insurance Facts

What happens after you sign the Purchase and Sales Agreement for your new dream home?

Once a copy of the Purchase and Sale Agreement has been supplied and we have obtained some basic information, we begin the behind-the-scenes process of having the title to the property you are purchasing searched at the Registry of Deeds. Our team will coordinate all aspects of the closing, including obtaining mortgage payoffs, real estate tax information, realtor fees, condominium fees, if applicable, and other items necessary to get ready for the closing. We can assist you with hiring other professionals such as home inspectors, engineers and surveyors. We will work with your Lender to make sure that all required documents are in proper form and ready for the closing. In addition, we will prepare the other necessary documents and schedule the closing at time that is consistent with the requirements of the purchase and sales agreement and is convenient for the parties.

A few days before closing, we will prepare the Closing Disclosure and provide copies to you for review. The Closing Disclosure sets forth a complete financial summary of the transaction including an accounting of all deposits, the loan proceeds, real estate taxes, transfer taxes, other expenses of the transaction and the balance of any funds required for the closing. On the day of closing, we will make sure that we have all the funds necessary to close the transaction.

At the closing, an experienced closer will meet with the buyers and sellers for review and execution of all the necessary documents. The deed, properly signed and notarized, will be delivered to the closer and all the loan documents will be signed for return to the Lender. Just prior to recording, we will ensure that the title is searched again to be certain that no issues effecting title have arisen. We will make sure that the transfer taxes and other expenses of the transaction are paid and record the deed and loan documents. You will then have the key to your new home.

Why buy title insurance?

Purchasing a home is likely the most significant purchase of a lifetime. What exactly is being purchased? Obviously, all of the buildings on the property and whatever items of personal property the seller has agreed to sell are sold. But what about the dirt - the real estate that the buildings sit on - is that being sold and who has the right to sell it? The conveyance of real estate is described in the law as the "transfer of title to the property." If it is so easy to describe, what is the point of title insurance, who pays for it, and what does it cost? Simply put: Title insurance prevents surprises and makes sure you get what you paid for. When you purchase a home, you purchase the right to be the one true owner of the property and the right to exclude all others. Regardless of the age of the buildings on the property, the real estate will likely have been transferred a number of times through sale, inheritance, foreclosure or bankruptcy. With each transfer, there are opportunities for mistakes. The title to the home can be subject to a number of surprises - called "encumbrances." For example, a prior owner may not have paid property taxes or federal income taxes. A contractor doing work may not have been paid. In both cases, a lien could have been filed against the property. The party claiming the right to sell the home may not have been the true legal owner of the property. If any of these issues do not surface before the closing, your ownership is burdened by them. Title to the home is said to be "clouded" rather than "clear" as it should be.

Without title insurance, you are left to deal with the issue on your own. You may need the services of an attorney. You may need to file a court action. The cost of legal services and your lost time and other expenses can be prohibitive.

Title insurance, like other insurance, is sold to provide protection for the unexpected rainy day event - in this case to address the "cloudy title." The title insurance agent is responsible for searching public records and insuring that the title is clear. If it is not and a claim arises that should have been addressed, the title insurance is available to protect against the claim if and when it surfaces. The title insurance company will pay the costs associated with clearing the title issue.

What is the difference between a loan policy and an owner's policy and are they both required?

Lenders generally require as part of the loan transaction title insurance. This insurance insures the title to the home to the extent of the lender's interest in the property. Thus, the insurance covers the amount of the mortgage and only for the duration of the loan. Once the loan has been paid in full, the policy no longer provides any benefit.

An owner's policy is optional. It provides additional coverage beyond the lender's policy. First, it provides coverage to the home owner. In addition, it provides coverage for the value of the property above the loan amount and for as long as the owner owns the property.

How much does title insurance cost and who pays for it?

The owner is required to pay for the lender's coverage and if desired also pays for the owner's policy. Both policies are priced based on the amount of the coverage. The amount of the loan and the value of the home as determined by the purchase price determine the cost of the policies. When both policies are purchased simultaneously, the cost for both policies is slightly less than if the two policies were purchased separately.

What types of coverage does Barristers offer?

What types of coverage does Barristers offer? We are licensed First American Title Insurance Company and Commonwealth Land Title Insurance Company agents. Our underwriters offer two levels of coverage for the benefit of owners. Standard Coverage and Enhanced Coverage.