There are several types of insurance policies involved in a real estate investment in Destin, Florida. And, this is also true anywhere in the United States. You’ve already heard about homeowner’s insurance and mortgage insurance for sure. But there’s another policy that, although not as well-known as the others, also serve an essential purpose: title insurance.
In this article, let’s clarify what title insurance is and why it’s necessary. According to Destin title companies, such as Emerald Coast Title Services and others, here’s everything you need to know about title insurance as a homeowner:
1. Protects Both The Lender And Homebuyer
Missing heirs, forgery, fraud, conflicting wills, and previously unknown tax liens are some of the hidden problems and claims that can affect the title to a real estate property. Even minor clerical errors can be a problem in the future. These mistakes are the reasons why title insurance exists. It serves as a protection for the homeowner and the mortgage lender from future losses. These possible losses may result from claims against the property and past faults.
To put it simply, title insurance protects the insured by verifying that the seller has a legal claim to the property. It’ll also ensure that the insured won’t be held accountable for any publicly recorded lien on the property.
All in all, this policy protects against both financial and functional loss. However, it’s still best to follow your prospective Destin title company’s social media accounts or YouTube channel, like this one. This way, you get to learn more about the specific policy they’re offering.
2. Two Types of Title Insurance Exist
Title insurance can either be a lender’s policy or an owner’s policy. From the name of the policies themselves, the lender’s policy obviously protects the loan provider (bank, mortgage company, other financial institutions), while the owner’s policy protects the homebuyer.
In case of title defects or liens, the lender’s policy covers the amount of money borrowed for the home purchase. On the other hand, the owner’s policy safeguards the homeowner’s expected rights once they own the property. This means that the homeowner can occupy the home legally and use it as they see fit. The owner’s policy also helps pay the legal fees that homeowners will have to face when there’s a need to defend their claim to the property’s title.
The coverage of the lender’s title insurance policy decreases annually. When the mortgage is paid off, it then goes away. The protection of the owner’s title insurance policy, on the other hand, lasts as long as the homeowner’s interest in the property remains.
3. A Homeowner Doesn’t Need To Have Two Types of Title Insurance
Unlike a lender’s policy, which is always required when getting a mortgage, lenders may not require an owner’s policy. In other words, the owner’s policy is optional.
However, the lack of an owner’s policy means that a homeowner won’t enjoy protection against future problems and losses. This also means that homeowners have to pay for the legal expenses involved in fighting for their right over the property themselves. It’s no wonder why many homebuyers still opt for the additional protection that an owner’s policy offers.
4. Doesn’t Offer Protection Against All Potential Property Risks
Building restrictions, zoning, and easements (rights of way) aren’t publicly recorded. They’re not covered by title insurance since the policy only offers protection against items that can be found in public records. Pending legal actions against the property are also not part of the coverage.
The good news is that many title companies offer upgraded title insurance coverage. These upgrades protect the insured against the following:
- Zoning: With zoning coverage, zoning laws can’t force policyholders to remedy or remove an improvement to their property.
- Building permit violation: Permits may be required when building a structure around a property, including the yard. If the previous owner of your home didn’t obtain them, you might be asked to remove a specific part of the property you now own. An upgraded policy that covers building permit violations protects you from such an inconvenience.
- Encroachment: With this extra coverage, you’re protected from anyone building a structure that crosses your property.
Before opting for any of these upgrades, be sure to ask the title company how each may be relevant to your case.
5. Title Insurance Policy Prices in Destin, Florida, are Regulated
Prices of title insurance policies in Destin and other Florida cities are promulgated and regulated by the state’s Finance Department.
It’s essential to note that the title insurance rate is a one-time payment, and the coverage is valid for the policyholder’s entire ownership of the property.
Final Thoughts
Destin title companies believe that any property deserves the extra protection that title insurance provides. After all, it’s one of the most significant investments one could make.
Some people argue that claims on title insurance are rare, so it may not really be necessary. However, when these threats occur, they become complicated legal issues. The best way to avoid all the headaches is to get covered.
Now that you’ve already learned all the basics of title insurance, it’s time to find a title company that can give you an overview of the best policy for you.
