Title Insurance protects against covered title problems that were not discovered during a title search. Such problems can include, among many others, errors and omissions on deeds (i.e. invalid notarizations, inadequate legal descriptions, deeds signed by minors, revoked Power of Attorneys, etc.), mistakes in the records (i.e. gaps in the chain of title, failure to join parties in foreclosures etc.) and forgeries.
There are two types of policies that protect different parties. First, there is the owner’s policy. This policy is usually issued with a policy limit in the amount of the purchase price of the real property. It protects the new owner’s interest in the real estate. The second type of policy is a lender’s policy which protects the lender’s mortgage interest in the real property up to the amount of the outstanding loan.
In Florida, the insurance rates are set by the Division of Insurance and the premiums are usually paid out of the closing proceeds. While the seller generally pays for the owner’s policy in most Florida Counties, there are some significant exceptions where the buyer pays (i.e. Sarasota, Collier, Miami Dade and Broward). The lender’s policy is usually paid by the party taking out the loan (i.e. the buyer). The Lender’s policy costs a mere $25 if it is issued simultaneously with the owner’s policy.
While these allocations are customary, the parties are free to allocate policy premiums amongst themselves as they see fit in the sales contract.
Disclaimer: This Article is for Informational purposes only and is not intended as legal advice.