Are you considering buying a home and wondering is title insurance required in Fort Myers, Florida?
When purchasing a home, one question that often arises is title insurance required in Fort Myers, Florida. While it’s not legally mandated by the state, title insurance can be an essential safeguard, especially if you’re taking out a mortgage. Even if you’re paying in cash, the potential risks associated with a clouded title—like liens, back taxes, or ownership disputes—make title insurance a smart investment. In this blog, we’ll explore why title insurance is so important, the types available, and what you need to know before finalizing your real estate transaction.
What is a clouded title?
A clouded title on a property is one with liens, back taxes or an ownership dispute. While, you may think the previous owners would be responsible for such issues, that’s not how it works. When you purchase a property, you are inherit everything that comes with that property, including its history. If there’s a lien by a contractor, you’re responsible for those charges if the property is in your name.
As a buyer, you can purchase the property in cash and assume all risk, including liens, back taxes, ownership disputes and property disputes. However, this is typically a terrible idea. Lenders won’t finance a property with a clouded title due to the risk of financial loss, so why should you as the buyer?
Is Title Insurance necessary, if no clouds on title?
Yes, because unrecorded problems with the title that could emerge months or years later. For example, if the previous owners didn’t pay their property taxes in the year that you purchased the property, the state revenue office might not have filed the paperwork on the tax lien at the time of purchase. Since you now own the property, you are responsible for the back taxes. Title insurance protects the buyer from defects that may arise in the title during the closing process. No one wants to have a transaction stall out at the closing table, but there are many situations which can cause this to occur:
- Recording errors that change information in the title, or false records
- Fraudulent representation or forgery of signatures
- Ownership claims from outside parties
- Unpaid Liens
- Undisclosed easements
Types of Title Insurance
It’s important to understand that there are two types of title insurance. The first protects the lender. The second protects the homeowner. Lenders and financial institutions will require the purchase of title insurance that protects them, not the buyer of the home. Understanding the difference between the two is crucial to ensure you, as the home buyer, are fully protected.
Lender’s Title Insurance – Required by financial institutions so that their investment is protected, and they often require the new homeowner to purchase this type of protection. Unfortunately, this does not protect the new owner. It only protects the financial institution.
Owner’s Title Insurance –Protects the buyer against defects on the title of the property. This type of policy helps pay for issues that arise with the title or deed up to the policy’s preset amounts.
Title insurance is not always required in Fort Myers, Florida, but there are situations where it becomes a legal requirement. If the buyer is paying in cash, no title insurance is required. If there is a lender involved in the transaction, they will require title insurance to move forward with closing, ultimately to protect themselves during the process. Regardless of the situation, title insurance is always a good idea.
Title insurance is a one-time premium to cover any unexpected surprises. While not always required, anyone buying a property in Fort Myers, Florida should strongly consider this investment for the peace of mind it brings.
Title Junction, LLC in Fort Myers is the professional, experienced, and dedicated title insurance company you need to guide you in navigating your complex real estate transactions. Call (239) 415-6574 to learn more about the services they offer and how they can help you get from contract to closing table.
Title Junction is a full service real estate title company serving the area of Fort Myers, Cape Coral and the entire state of Florida since 2005. The company handles a number of real estate title services for both commercial and residential properties.
Have questions? Give us a call at 239.415.6574.
In case you missed it, check out our last Title Junction post: 8 Compelling Reasons to Make Florida Your Home