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Title Insurance: Protected from the Unexpected
For many people, title insurance seems like an extra expense in the already pricey undertaking of purchasing a home. Escrow funds, realtor fees, paying for inspections, fees for property taxes, the title search fee…why would you want to tack on yet another expense? A fair point—unless you understand what you could lose if an unexpected claim is filed against you and you have no protection. Understanding what title insurance is and what it covers makes it clear why it just might be the most important piece of your new home purchase.
Title insurance protects you from all unforeseen claims arising against your property. What kind of claims, you may ask? They can come in the form of probate issues, liens against the property or even old fashioned forgeries. Though it may seem like something that only happens to other people, the same could be said of home burglaries and serious car wrecks. Additionally, if your new home was foreclosed on at any point before you took ownership, there’s an increased chance of claims against the property, from unpaid contractors to the prior owner’s nasty divorce.
Here’s an example of something that COULD happen. You just purchased your dream house and are moved in. Then comes a knock at the door—uh-oh, it’s a contractor who installed new windows for the previous owners claiming he never got paid. Or how about this scenario; suppose the previous owners are going through a divorce and one party forges the other’s name on all the selling documents. The other spouse, whose name was forged, could come back to you and claim the house was sold under false pretenses and try to get it back from you. Now you have a claim against your home. This means going to court to fight the contractor, which means you incurring a large fee for attorney costs. And then there’s the chance that you’ll lose your house, and then what will you do?
A house is one of the largest investments you can make, and to have it all go up in smoke with nothing to show for it can be a devastating blow. That’s where title insurance comes in to protect you from the unexpected. There’s a good reason why lenders require you to buy a lender’s title insurance policy when you purchase a home…so why not follow the lead of the financial experts and protect your own assets with an owner’s title insurance policy? With title insurance you are protected!
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: What Is Power of Attorney?
What Is Power of Attorney?
When you hear the words ‘power of attorney,’ you might assume they hold significant weight from a legal standpoint. And you’d be right. The two most basic types of types of power of attorney are general power of attorney and limited power of attorney. So, just what exactly are these powers of attorney and how do they work?
To keep a board game running while one player takes a break, that player could say to another ‘roll the dice and move for me.’ They are granting the second player power to act fully within the game rules. This is basically what general power of attorney means in the rules of the legal system – authorization for one person to act legally on behalf of another person.
If the player says ‘roll but don’t move’, that would be called limited power; limited legal power-of-attorney might cover only healthcare decisions, or only property decisions. While some legal jurisdictions accept spoken power-of-attorney decisions like this game-play example, other jurisdictions, or institutions like banks or hospitals, frequently require written or even notarized documents. The person granting this power must have the mental capacity to understand their decision.
In a nutshell, power of attorney is essentially the power you give to your attorney to handle your legal affairs, which means that you’re trusting in your attorney to do what’s best for you depending on the legal situation at hand. That’s a pretty significant decision, but one that is often required to navigate the tricky waters of the legal system.
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: Beware of Unlicensed Title Agents
Beware of Unlicensed Title Agents
Buying or selling a house is one of the most important financial decisions you will ever make and can be a life-changing experience. While it’s standard procedure to research your real estate agent and lender to make sure they are qualified and the best fit for you, many people don’t put the same amount of care into making sure the credentials of their title agent are up to snuff.
Unfortunately, there are some title agencies that don’t do their due diligence and employ title agents whose licenses have been compromised. For example, an investigation was opened in 2015 on a title insurance agency for failure to designate a licensed and appointed title agent in charge of the agency.
The unlicensed agent in question signed policies as the agent in charge, even though they’d lost their appointment with the Bureau of Licensing for failing to comply with Continuing Education requirements. The agent was sent notice in 2011 warning that their license would be terminated, and in 2012 their license expired. That means they were working in the title industry for 3 years without a license! In the end, the agent was fined $7,500 and never reinstated.
Fortunately, there is an easy way for you to find out if the agents of your chosen title company are licensed. Most states have a website where you can look up the status of a title agent’s license. For Florida, you can use the Florida Department of Financial Services Licensee Search to search the name of the title agent you want to check on, and it will give you the details of the status of their license along with other information.
At Title Junction, all of our title agents are professionally licensed and in compliance with title regulations at all times. But you don’t have to take our word for it—search the name of any of our title agents at https://licenseesearch.fldfs.com for your own personal peace of mind.
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: Understanding the Basics of Short Sales
Understanding the Basics of Short Sales
If you’re thinking about purchasing a short sale property you probably have a few questions, such as whether the title is free and clear or if liens could present a problem. These are very important questions that you want to have fully answered before making a serious offer, since they’ll affect your ownership.
As the purchaser, you are not responsible for any lien on the home—the owner is still the responsible party for any debt or obligations. Sometimes these “obligations” can become deal breakers in a short sale, especially if the owner is financially strapped or the lender is unwilling to assist. If you were to close on a short sale and these “obligations” were NOT satisfied, then you would most likely be held accountable for them. These obligations could include property tax liens, IRS liens, contractor liens, second mortgages, or even HOA liens.
You must remember that a short sale is NOT a foreclosure. In a foreclosure, most obligations would or could possibly be wiped clean. Not so in a short sale. Since a short sale occurs when a property is sold for less than the original owner owes on it, it can be a complicated business, since lenders have to accept less than the amount they loaned to the original homeowner. And because obligations must be satisfied in some way or another, some hefty negotiating is usually required.
In a short sale, the title is rarely free and clear, so you’ll need to do your homework and have open communication with the title company. Once an approval is completed, ask for a title commitment, complete your due diligence, and ask questions if you do not understand something. You may even need to assist your seller in a negotiation.
Be patient, short sales tend to suffer failure rates and sometimes simply can’t close in time to prevent foreclosure. A persistent lien holder can play a key role in delaying the closing of a short sale. If all parties are willing to be a part of the process then you can come out “free and clear!”
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: Defining Title Insurance and Escrow
Defining Title Insurance and Escrow
Buying and selling real property can be a mind-boggling experience in Cape Coral, Fort Myers, or anywhere else in Florida. Unfortunately, making the process more user friendly is not something that’s going to happen soon, so learning some basic terminology goes a long way toward relieving the headaches associated with buying or selling real estate. Whether you’re looking to purchase or sell, understanding what title insurance and escrow are will assist you in your real estate ventures.
The Value Of Title Insurance
While title insurance might appear to be an unnecessary expense, it’s almost always a requirement if the buyer is purchasing property with someone else’s money. The reason for this is that even though the purchaser receives a deed for the property, it doesn’t always mean that there is only one legal owner. Prior owners, their spouses, partial owners, and creditors who have a stake in the property could come forward at any time and claim their share of the property, leaving the purchaser with a debt they are not responsible for. Title insurance protects them and their lending institutions from financial loss due to unforeseen title defects and liens.
A title insurance company will defend the insured if a lawsuit is filed. Additionally, it will reimburse insured parties for monetary losses if there are errors on the property that need to be cleared from the chain of title before the purchaser and their lending institution can have a clear title on the property.
Protecting Your Interests With An Escrow Account
Although escrow is not formally called insurance, its basic purpose is to insure that a stipulation or set of stipulations is met. In escrow’s most basic form, it is a deposit of funds, a deed, or any other item by one party for delivery to another party upon completion of set conditions or events. The most common usage of escrow is for the down payment of a home purchase.
Title insurance and escrow accounts are terms many first time property buyers and sellers have never heard and ones that even some second and third time property buyers and sellers may not understand. Working with an established title company can make the difference between a smooth transaction and one that’s riddled with problems and unanswered questions.
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: What Is A Short Sale?
What Is A Short Sale?
When a lender releases an existing mortgage for a payoff that is less or ‘short’ of the total amount due, the transaction is called a ‘short sale.’ Lenders sometimes accept short sales as an alternative to repossession and foreclosure, which can be expensive.
Likewise, a short sale avoids foreclosure and credit-rating reductions for the seller. Short sales may be prompted by a seller’s inability to make payments, or the property value dropping below the mortgage balance – ‘underwater’ – or possibly both.
Short sales are usually initiated by the homeowner, but lender approval is required to proceed. Buyers typically negotiate short sales with sellers, but lender approval is also required to finalize a short sale. Short sales are more complex and may take longer than conventional purchases.
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: Wire Fraud: Scammers Are Targeting Your Real Estate Transaction
Wire Fraud: Scammers Are Targeting Your Real Estate Transaction
A common way to transfer large sums of money from one party to another is via wire transfer, particularly for real estate transactions. And why not? It’s quick, it’s direct, it’s…being targeted by wire fraud criminals?
Yes, the same kinds of criminals who snatch credit card numbers and identities are now targeting the mother load of all digital heists—your real estate transaction. Even some of the cheaper real estate deals commonly place in the hundreds of thousands of dollars, making them a desirable target for these cyber criminals.
But how do they do it? Surely no one would be foolhardy enough to release such vital information to a complete stranger or in a public forum.
Remember what we said about these criminals being the same kind as those who steal identities? That’s exactly how they prefer to commit wire fraud. After infecting your real estate agent, attorney, or title agent’s email with undetectable malware, they keep a close eye on your communication until it’s almost time to close. Then they assume the identity of your trusted agent and send you a very official-looking email with new wiring instructions, saying that there’s been a last minute change. A blatant warning sign is when they demand immediate action.
Worse yet, some of these criminals will actually call you, posing as someone from your title company to assure you that the wire transfer request is legitimate. And unlike fraud relating to bank accounts and credit cards, banks will not reimburse you for funds that were stolen via wire fraud, making it an even more devastating loss.
However, there are ways to thwart wire fraud. If you receive an email containing wiring instructions, call your real estate agent and/or title company using numbers that come directly from their website or another credible source, not ones provided via email. They’ll be able to verify whether the wire request is valid or not.
In addition, some banks will allow you to set up security measures such as voice verification and other extra steps to thwart fraud. Above all, it’s important to be vigilant. Buying or selling real estate can be a complicated business, but don’t ever let yourself be pressured into sending a wire without proper verification.
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: How Do I Get a Discount on My Title Insurance?
How Do I Get a Discount on My Title Insurance?
The only time you can get an outright “discount” on title insurance is if it is being reissued, meaning that you previously had a title policy. In Florida, the requirements to obtain the reissue or reduced rate for your title insurance are pretty straight forward.
You only need your prior title policy for the identical land involved in the current transaction, so long as you are the person on title. You are entitled to the reissue rate whether the new transaction is insured by the prior insurer or a new insurer. For a sale/purchase the policy must be within 3 years to date. For a refinance the policy never expires for a discount.
Title Insurance Reissue Rates
The Florida Administrative Code sets the premium for title insurance policies issued within 3 years of a previous policy (for sales/purchase) at:
- $3.30 per thousand for policies up to $100,000
- $3.00 per thousand for policies over $100,000 and up to $1 million
- $2.00 per thousand for policies over $1 million and up to $10 million
- $1.50 per thousand for policies over $10 million
In order to qualify for these rates, the title agent must include proof of the previous title insurance policy. Failure to include the proof of prior coverage within 3 years could result in the title insurance agent and agency being found to have violated Subsection 627.780(1), Florida Statutes, for quoting, charging, collecting or accepting a premium for title insurance that is other than the premium implemented by the Florida Administrative Code.
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: Ways to Hold Real Estate Title
Ways to Hold Real Estate Title
One of the most important choices you will make as a property buyer is how to hold real estate title to your property. Holding title to a property refers to how you own the property and the rights that go along with it. Along with choosing how to hold title, buyers have the opportunity to choose a title agency to manage the title work. Many title agencies offer notary and escrow services as well and some buyers like having all of these services under one roof.
There are four basic types of home ownership, or ways to hold title, in the United States. The primary impact these choices have on the property owner has to do with how the property is passed on after death.
Fee Simple is the most common and, as the name implies, simplest way to hold title to a title property. This type of ownership provides full rights of possession at present and in the future to the person named on the deed. This ownership lasts until the property is sold.
Joint Tenancy with Right of Survivorship is commonly used by those who purchase a home together. With this type of real estate title, each owner has an equal share of the property. The Right of Survivorship portion of this type of title means that when one of the owners dies, the surviving owner automatically receives the deceased’s portion of the property. The property is not disposed of in a will and does not pass to heirs of the deceased.
Tenancy in Common is similar to Joint Tenancy but without the Right of Survivorship. Each owner has a specified interest in the property. They may have equal or unequal shares. While their interests may be unequal, they have 100% use of the property, no matter what their shares actually are. Since they both have 100% use of the property, it cannot be sold without the others’ permission, but an owner may transfer his or her interest in the property without the permission of the co-owners. The key component of this type of ownership is that each owner can specify whom the property is to go to upon their death in their will. It does not automatically pass to the co-owner.
Tenancy in the Entirety is restricted to married couples. It is also called the Community Property. Similar to joint tenancy, each partner owns 100% of the property and needs the consent of their spouse in order to transfer ownership of the property.
The title agency plays an important role in your real estate transaction. From conducting a title search to holding escrow funds to providing notary services, your title agency is intimately involved with your property transaction.
No matter how you ultimately decide to hold your real estate title, you will need to have a notary public oversee the signing of the transaction documents. A notary is a public official licensed by the state to perform acts in legal affairs, primary of which is serving as witness to signatures on documents such as real estate forms, mortgages, deeds, and titles.
The deed will need to be filed appropriately with your county recorder or registrar of deeds. In some states, the signing of the deed must also be witnessed.
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.
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: Understanding the First Page of Your Closing Disclosure
Understanding the First Page of Your Closing Disclosure
In order to fully understand your home loan, it’s important to understand some of the key parts of the documents associated with it. Let’s talk about your closing disclosure—specifically, the first page of it.
- The Loan Amount: This is the total you will actually borrow.
- The Interest Rate: This does NOT include the fees factored into the annual percentage rate (APR) on Page 5.
- Projected Payments: This will show the chief cost components – Principal & Interest, Mortgage Insurance, and estimates of your Escrow Payments over the life of the loan. You may see different columns for different periods if changes in terms such as mortgage insurance change payment totals.
- Closing Costs: This summarizes your loan closing expenses, and Cash To Close adds the additional amounts due to give you the cash balance you will need in 3 business days.
If your loan has a penalty for pre-payment or includes a balloon payment, Page 1 will summarize the terms.
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: How Necessary Are Title Insurance and Homeowner’s Insurance?