‘The gap’ is the period of time between when a title commitment or update is prepared, and when the deed and/or mortgage is recorded in public records. This period generally only lasts a few days or weeks, during which a new lien or interest in the property may be recorded. For this reason, the lien may not be recorded as an exception on the title policy.
Now let’s look at F.S. §627.7841, which gives insight into how title companies must handle insuring title defects that occur during the gap period.
All title companies are required by Florida law to insure the gap when they are tasked with disbursing funds for a transaction and recording associated documents. This means that the title company’s underwriter has an obligation to resolve claims relating to liens, mortgages, and other encumbrances that are validly recorded during the gap period while the title company is handling all aspects of the closing.
Understanding the gap period is especially crucial now with the COVID-19 pandemic, as many county clerks are operating with skeleton crews and have temporarily suspended in-person recording, potentially making the gap period longer than usual since record searches can’t be conducted as efficiently.
Title Junction’s underwriter is NOT requiring any additional indemnity agreements or holding harmless agreements from the parties in order to close despite the increased risk associated with the longer gap period. The standard no lien affidavits sufficiently address potential gap issues.
Stay safe and healthy!
At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.
In case you missed it, check out our last Title Junction post: Social Distancing and Real Estate