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What is a title?
A title is the foundation of property ownership. It is the
owner's right to possess and use the property. Back
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What is a title search?
A title search is a detailed examination of the historical records
concerning a property. These records include deeds, court records,
property and name indexes, and many other documents. The purpose of
the search is to verify the seller's right to transfer ownership, and
to discover any claims, defects and other rights or burdens on the
property. Back
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Why
is transferring the title to real estate different from transferring
the title to other items, such as a car?
Because land is permanent and can have many owners over the
years, various rights in land may have been acquired by others (such
as mineral, air or utility rights) by the time you come into
possession of it, even if the land has never before been built upon.
So in order to transfer a clear title to a piece of land, it is
first necessary to determine whether any rights are outstanding.
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What
kind of problems can a title search reveal?
A title search can show a number of title defects and liens, as
well as other encumbrances and restrictions. Among these are unpaid
taxes, unsatisfied mortgages, judgments against the seller and
restrictions limiting the use of the land. Back
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Are
there any problems that a title search cannot reveal?
Yes. There are some "hidden hazards" that even
the most diligent title search may never reveal. For instance, the
previous owner could have incorrectly stated his marital status,
resulting in a possible claim by his legal spouse. Other "hidden
hazards include fraud and forgery, defective deeds, mental
incompetence, confusion due to similar or identical names and
clerical errors in the records. These defects can arise after you've
purchased your home and can jeopardize your right to ownership. Back
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What is title insurance?
Title insurance is your policy of protection against loss if any of
these problems - even a "hidden hazard" - results in
a claim against your ownership. Back
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How
much could I loose if a claim is filed against my property?
That depends on the claim. In an extreme case, you could loose
your entire home and property - and still be liable to pay off the
balance of your mortgage. Most claims aren't that dramatic, but even
the smallest claim can cost you time, money and aggravation, and you
may have to pay costs for a legal defense. Back
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How
does title insurance protect my investment if a claim should arise?
If a claim is made against your property, title insurance will,
in accordance with the terms of your policy, assure you of a legal
defense - and pay all court costs and related fees. Also, if the
claim proves valid, you will be reimbursed for your actual loss up
to the face amount of the policy. Back
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The
owner of the property has a deed. Isn't that proof of ownership?
Not necessarily. A deed is just a document by which the right of
ownership in land is transferred, whatever that right may be. It's
not proof of ownership, and it doesn't do away with rights others
may have in the property. In addition, a deed won't show you liens
or claims that may be outstanding against the title. Back
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Wouldn't
an abstract show property limitations and restrictions?
Maybe - and maybe not. An abstract is a history of the property
title as revealed by the public records. Abstracts may contain
errors and do not disclose "hidden hazards" that
can threaten your property title if you do not have a title
insurance policy.
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What about an
attorney's opinion?
An attorney's opinion is based on a search of the public records.
So, once again, even the most exhaustive search of these records may
not reveal everything. Unlike a title insurance company, an attorney
is not liable if you should suffer loss because of "hidden
hazards" in the title. Back
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The
owner of the property I want to purchase has lived in the home for
only six months. He had a title search done six months ago. Why do I
need another one?
Because the owner could, in a very short time, do many things to
encumber the title. For example, he could
grant easements or construct improvements that encroach on adjacent
property. He could get married or divorced, or have a lien filed
against the property. It is necessary to conduct an up-to-date title
search to uncover any such problems. Back
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If
the builder of my home already has title insurance on the property,
why do I need it again when I purchase the land from him?
A title policy insuring the builder does not protect you. Also, a
great many things could have happened to the land since the
builder's policy was issued. Liens, judgments and unpaid taxes for
which prior owners were responsible may be disclosed after you
purchase the property- causing you aggravation and costing you
money. Back
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Are
there different types of title insurance policies?
Yes. Basically there are two different types of policies - a loan
policy and an owner's policy. The loan policy protects the lender's
interest in the property as security for the outstanding balance
under the buyer's mortgage. The owner's policy safeguards the
buyer's investment of equity in the property up to the face amount
of the policy. Back
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How much does title
insurance cost?
Probably a lot less than you think. Charges vary in different
sections of the country, but generally the cost of title insurance
(including search, examination and related services) amounts to about
one percent, or less, of the cost of the property. And unlike other
insurance premiums, which must be paid annually, a title insurance
premium is paid one time only, usually at settlement. Back
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How long does my coverage
last?
For as long as you or your heirs retain an interest in the property
and, in some cases, even beyond. Back
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What is a HUD
settlement statement (HUD-1)?
This is a summary of the financial portion of the real estate
transaction. The title company is required by the Department of
Housing and Urban Development to use the HUD-1 on virtually all one
to four family residential real estate transactions involving a
lender. The HUD will list the purchase price, loan amount, closing
costs for both buyer and seller, and show all pro-rations and sums
being disbursed by the title company to all parties. It also clearly
summarizes the total cash due from the buyer. Back
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What is prepaid interest?
This is the so-called odd day's interest which the
buyer/borrower must pay from the time a loan closes to the first day
of the following month. For example, if your loan closes on January 2,
your first payment will be due on March 1. Since loans are paid in
arrears, the March payment covers the month of February. The prepaid
interest covers the period from January 2 through January 31. This is
considered a settlement charge and is shown on the HUD-1.Back
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Why
is the payoff on my old loan higher than the principal balance?
First, you may have an escrow shortage with your current lender.
This will exist if you did not have sufficient funds in your escrow
account for taxes or insurance, and your lender advanced funds
for payment of those bills. Second, since your current loan is also
paid in arrears, your lender will add interest from the first day of
the month the loan is paid off through the actual date of the payoff.
Third, if your loan is relatively new, since it is paid in arrears,
you will have paid down only a small portion of the principal. The
additional interest paid in arrears can actually make it seem as
though you are paying off more than you borrowed. Back
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What is pro-ration
of property taxes?
This is the process of charging either the buyer or the seller for
their share of property taxes for their respective time of ownership.
Property tax year in Florida runs from January 1 through December 31.
Taxes become due and payable November 1 of each calendar year. They
become delinquent on April 1 of the subsequent year and are subject to
early payment discount if paid before March 1of the subsequent
year. Back Up
What is transfer tax?
On the conveyance of real estate, a documentary stamp tax must be
paid on the sale price or the value of the interest being transferred.
The rate is currently $.70 per $100 dollars. The tax is
generally, but not always, paid by the seller. Back
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