Title Insurance, Escrow & Closing FAQs

Popular Questions

What is title?

When you purchase a home, one of the documents that you will receive and be required to sign is for a title. A title gives the person the right to or ownership of a certain piece of real estate property. Once you have found a piece of property that you are interested in purchasing and you reach an offer that is acceptable to both the seller and the buyer, you will receive a preliminary title report. This will take about a week to receive. The title company will complete the preliminary title report. The title company is selected by either the buyer or the seller — or by the lender who is going to finance the purchase. The title report shows ownership of a specific piece of land/property as well as any liens on that property. This report will also show any title defects that might not be known about otherwise. If there is anything on the title that needs to be cleared up before the new buyer takes possession, it can be done after this report is received. A title report is required in the home purchase transaction.

What is title insurance?

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or the defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.

How does title insurance differ from other insurance?

Insurance such as car, life, health, etc. protects against potential future events and is paid for with monthly or annual premiums. A title policy insures against events that occurred in the past of the real property and the people who owned it, for a one-time premium paid at the close of the escrow.

Title Insurance

What does title insurance cover?

Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy.

Who needs title insurance?

Purchasers and lenders need title insurance in order to be insured against various possible title defects. The buyer, seller and lender all benefit from the issuance of title insurance.

What are the policy types?

A standard policy insures the new owner/homebuyer, and a lender’s policy insures the priority of the lender’s security interest.

Who pays for title insurance?

In Florida it varies per county and can be negotiated in the contract. The seller generally pays for the title insurance and chooses the title/closing company in most Florida counties. The buyer generally pays for title insurance and chooses the title/closing company in the following counties: Sarasota, Collier, Miami Dade and Broward.

Escrow

What is escrow?

Escrow refers to the process in which the funds of a transaction (such as the sale of a house) are held by a third party, often the title company or an attorney in the case of real estate, pending the fulfillment of the transaction.

How does the Escrow Process Work?

The buyer, seller, lender and/or borrower cause escrow instructions to be created, signed and delivered to the escrow officer. The escrow officer will then process the escrow, in accordance with the escrow instructions. When all conditions required in the escrow are met, the escrow is “closed”.

The escrow holder acts for both parties and protects the interests of each within the power of the escrow instructions. Escrow cannot be completed until the instructions have been fully satisfied and all parties have signed escrow documents. The escrow holder takes instructions based on the terms of the purchase agreement and the lender’s requirements.

How is a title policy created?

After the escrow officer or lender opens the title order, FL Title & Escrow begins a title search. A Preliminary Report is issued to the customer for review and approval. All closing documents are recorded upon escrow’s instruction. When recording has been confirmed, Liens and debts paid, funds are disbursed, and the actual title policy is created.

Closing

Closing (or settlement) is the final step in executing a real estate transaction.

The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On the closing date, the parties consummate the purchase contract, and ownership of the property is transferred to the buyer. In most jurisdictions ownership is officially transferred when a deed from the seller is delivered to the buyer. Lenders providing a mortgage loan will often require title service, including title search and title insurance, appraisal, land survey, and attorneys to be involved.

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