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Like any industry, the title insurance business has a lingo all its own.  The Florida and Cape Coral real estate title insurance agents at Title Junction can walk you through anything you don’t understand and explain any unfamiliar terms to you.  But it always helps to do a little research on your own, which is why we’ve compiled a short list of some of the most commonly used title insurance terms.

Basic Definitions To Know

One thing that is often confused is the difference between a real estate title and a property deed.  Often referred to as “holding title to a property”, a Title provides you with legal use and possession or ownership of the property.  However, it is not a physical piece of ownership evidence; that is the Deed.

Title Insurance, itself, is an indemnity or loss-prevention insurance policy that protects the buyer from legal defects in the title that occurred prior to taking ownership of the property.  In cases where a mortgage is taken out, two title insurance policies will be issued: An Owner’s Policy for the homeowner and a Lender’s Policy, or mortgage insurance, for the mortgage lender.

Understanding Other Terms

You may hear or see the word “ALTA” as you go through the title insurance process.  ALTA stands for American Land Title Association, which is the leading trade association of title insurers. 

Another commonly used term is Escrow.  Escrow has many different meanings, depending on how it is being used.  As it relates to title insurance, it refers to the funds that you provided as earnest money when you made the initial offer on the property.  Those funds have been sitting in a special account set up by your escrow holder, often the title company.  The Closing, which is the final meeting between the buyer, the seller, the lender, title agency, realtors and possibly lawyers where property ownership is transferred.

The Title Report

One of the main duties of a Fort Myers title insurance agency like Title Junction is to conduct a Title Search on the property in question.  A Title Search is an in depth check of public records to make sure the property is legally available for sale and there are no encumbrances or liens against it.  This also shows the ownership history of the property, including mortgages and liens against it.

A Lien is a financial claim to the property.  It may be a mortgage, mechanic or contractor lien or court judgment.  Liens generally must be paid off before a mortgage lender will allow the property sale to take place.  A property may also have an Encumbrance, a legal interest in the land that may affect its value.  Encumbrances could be easement rights, zoning ordinances, claims or liens, unpaid taxes or restrictive covenants.  Encumbrances do not restrict the sale of the property.

The best way to ensure you are comfortable with these terms is to speak with your title agent.  Title agents use these terms all the time and can explain exactly how each is relevant to your personal transaction.  An open relationship with your title agent will ease any pre-closing anxiety you may have.

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