Buying a home in Plantation, FL, can be a process, but the reward of having your own place is huge, both on the first day opening the front door with your own key, as well as years afterward, raising a family or settling in for retirement. However, all of that can be put at risk with a property title that is compromised, which is a big risk when buying a property that hasn’t been researched properly. Instead, pulling in the legal expertise for title insurance early helps avoid this nightmare as well as ensures that the property bought really does belong to you properly.
Understanding the Mechanics of Title Insurance
Insurance generally provides for financial recovery for a specific thing or activity. In the case of property titles, title insurance protects a property buyer from financial loss if a real property bought turns out to be compromised in terms of its legal ownership. Legal ownership in a purchase can be contested when it turns out that what was sold to a buyer wasn’t owned or represented properly. A buyer assumes that a property sold is free and clear of any legal issues.
That means, when purchased, the full ownership of the property becomes that of the buyer (aside from any mortgage involved). However, it can happen more frequently than expected that a property sold has lingering ownership issues. Those can include multiple owners buried in the title history, an incorrect transfer in the past, liens for money owed and the real property as collateral, unpaid taxes owed, and more. A new buyer can unexpectedly be stuck with a big problem when the title is not handled properly before the sale, which usually comes in the form of a lawsuit.
Title insurance is also particularly useful when the title transfer fails. The transfer of property, usually in escrow, is probably the most vulnerable moment for ownership of property. It depends on all the parties cooperating and doing their part, as well as intermediaries remaining professional and processing the paperwork correctly. However, even with no intentional problems, mistakes happen. A simple typo can cause a property and home to transfer ownership incorrectly. Title insurance should protect a buyer from this kind of mistake as well.
Who Writes Up Title Insurance?
If a homebuyer does nothing, they will be offered a generic title insurance plan, usually, but the escrow officer hired by the lender to manage the property purchase. The seller then coordinates with the escrow officer for the sale processing and exchange of legal documents. While this might sound good and straightforward, the buyer is putting a lot of trust in the escrow officer and lender’s choice of services to take care of the deal as well as the buyer’s financial interest.
In reality, the lender is well protected, making sure its financial interests are defended in the written details. For the buyer, however, no such personal protection is afforded on a guaranteed basis. Some generic policies provide a standard boilerplate protection, and others might leave it out altogether. If there is a legal defect in the title history involved, a mistake, or an intentional slip, the buyer has no idea unless he or she actually reads the title insurance coverage policy offered or tries to exercise it and gets denied coverage for a problem.
On the other hand, if the buyer brings in their own title insurance policy crafted and reviewed by their own lawyer, then the buyer’s interests are definitely protected, and the document, as well as the transaction it will protect, are written far better for the interests of the buyer specifically. Both insurance contract versions of the buyer and the lender can be integrated into the same document with negotiation in escrow. Unfortunately, many homebuyers don’t know how to ask or seek representation for this.
Typical Issues to Watch for in a Title Transfer
The biggest concern for a title transfer lays hidden in its history. Because a title goes back to the very origination of a property parcel as a separate section of private real property, title history can include records of a lot of different exchanges and transfers. More challenging, not every transfer is a one-for-one movement of property from one party to another. For example, one transfer could be a split from one party to three parties. Additionally, a real property title transfer could be temporary, such as in a lease. Other transfers could be partial but permanent, such as in an easement. The combination of history and different transactions make up the risk that the title is not completely clean when sold as a new purchase, especially when dealing with a used home sale.
There can also be local government clerical errors in processing the paperwork at the local recorder, the official record-keeping entity, and there can be things left out or parties intentionally trying to refile fraudulent transfers of title, partial or whole. Since processing clerks don’t regularly double-check records making changes on title, title fraud happens more than people think. Once a “defect” or problem is identified, the seller of the property has to fix it for a clean transaction to occur. Otherwise, the sale is not completely valid. Unfortunately, this is where a buyer can get burned, handing over the funds for a purchase that turns out after the fact to be defective. If no one checks at the time of sale, the buyer is left losing money and not owning the property bought completely or at all.
With the corrections made, a buyer’s attorney can check everything again to make sure there is, in fact, a clean title transfer ready to go. This allows the escrow to be completed, the title transferred and recorded correctly with the new buyer, and the financial value completely exchanged into the property versus being lost on a bad sale.
And, in case something still goes wrong, the buyer-specific title insurance then provides coverage and protection from loss.
Getting Started the Right Way
If you’re thinking about buying a home in Plantation, FL, and you want more protection than a generic title insurance policy for your home buying, then it’s a smart move to bring in your own attorney. Remember, nobody else is obligated to watch out for you as the buyer. The old Roman rule of caveat emptor or buyer beware, still applies far too accurately. With a qualified title search and attorney review of your title insurance policy, you can enjoy a far more reliable home-buying transaction instead.
