As you go through the home-buying process, your title company will do a title search and offer you title insurance. These two things go hand-in-hand and are a very significant part of any real estate transaction.
But what is a title search looking for? And what is title insurance all about? Let’s take a look at their differences so that you may understand how you can’t have one without the other.
What is a Title Search?
A title search is a thorough review of all the records pertaining to the property’s history, dating as far back as they go. This is done for a couple of reasons – to find the current, legal owner of the property and to make sure there are no defects in the title.
A title search will uncover the legal owner of the property. This will determine whether the person who is selling the property actually has the authority to do so. If a property is held in a trust, the parameters of the trust will need to be examined as well to determine who has the right to transfer the property.
You also want a clear title, one that does not have any encumbrances or title issues. For example, the title examiner will be looking for:
- Liens
- Judgments
- Outstanding taxes
- Easements
- Encroachments
- Bankruptcies
- Forged documents
- Missing heirs
Anything that is showing up on the title will need to be addressed before the closing can take place.
The title search will help to clear up all of these issues so that a title insurance policy can be issued.
What is Title Insurance?
As wonderful and thorough as title searches can be, they do not always provide a 100% guarantee that they will find everything associated with the title. A title agent can state that a title is clear for closing – and then find out days, weeks, or months down the road that something was missed during the title search.
Many different situations can lead to something being missed, such as a missing will, an unknown heir, a fraudulent transaction, an erroneously recorded deed, and simply, human error.
Each of these things could leave your property rights at risk should they arise after you take ownership.
Thankfully, title insurance protects you from things that happened in the past (before you owned the property) that may come up in the future.
You may live in your home for years and never have an issue. Or, you could live in it for 4 months and have someone file a claim that your property is legally theirs. Truth is, you don’t know what the future holds – and title insurance can protect you from this uncertainty.
Because you are not the only one with interest in your property, there are two different types of title insurance policies: A lender’s title insurance policy to protect the lender and an owner’s title insurance policy to protect yourself and your heirs.
Florida law requires that you are to purchase title insurance when you invest in a new property.
Learn More at Florida Title Center
A title search and title insurance both play a very big role in your real estate purchase. To ensure that you get the best service and the most thorough title examination, you need the team of experts at Florida Title Center.
To learn more or to get started, contact us today at (954) 848-4224.
