What Do Florida Title Insurance Policies Cover?
We all own different types of insurance – home, car, health, life. While these policies all cover different things, they share one fundamental quality: these policies address risks, accidents, or calamities that may happen in the future. Title insurance, on the other hand, is unique in that it covers risks or errors that already exist.
The kinds of problems covered by title insurance policies on real property relate to flaws in title or ownership that may predate the polices by months, years, or even decades. Such defects in title may not become an issue until the owner tries to sell or refinance their property. At that point, these problems can scuttle a lucrative transaction, lead to costly litigation, and otherwise cause owners, sellers, and lenders a whole bunch of headaches.
There are two main kinds of title insurance: lender’s policies and owner’s policies.
A lender’s policy is one taken out by the bank or mortgage company to protect their interest in the property from any title defects or claims made by others who believe they have rights in the property. Even though most borrowers pay the one-time premium for the lender’s policy at closing, the policy provides no protection to the property owner; it is solely for the protection of the lender’s investment.
An owner’s policy is taken out by an owner or purchaser to protect their ownership interests against specific risks set forth in their policy. In Florida, who pays for the owner’s policy in a residential transaction varies by county. In some counties, the seller will pay for title insurance. In others, including Santa Rosa County, buyers are expected to pay the premium on the owner’s policy.
Even though a title search will be conducted as part of the purchase process, errors may remain undiscovered at the time of closing. The owner’s policy is designed to cover such “clouds” on title, as well as cover any attorney’s fees necessary to resolve any disputes which arise because of flaws in title. If someone challenges your title, your title insurance company will defend your title and pay all related costs and loss in property value that may result, up to the limit of your policy.
While the specific defects provided in an owner’s policy may differ, most cover claims related to title flaws such as:
- Unreleased or unsatisfied mortgages
- Outstanding or unknown liens or encumbrances
- Error in a prior deed
- An easement or restrictive covenant on the property which negatively restricts its intended use
- Outstanding real estate taxes
- Errors in public records
- Illegal deeds
- Missing heirs
- Boundary/survey disputes
McDonald Fleming Moorhead: Destin Title Insurance Attorneys
Title policies are subject to limitations and exclusions. Also, there are additional coverages that you may need. Because title insurance is heavily regulated in Florida, you have to know what these coverages are, when they apply and whether they are appropriate in a given situation. This is what we do. You can work with a title insurance attorney from McDonald Fleming Moorhead who understands these policies and can advise you on what is covered and what isn’t.
McDonald Fleming Moorhead firm’s sister company is Clear Title of Northwest Florida, LLC,. Clear Title is a Florida licensed title insurance agency with three locations in the greater Pensacola area. This gives our clients and customers the best of both worlds: the convenience, speed and efficiency of a title insurance agency and the experienced guidance of a top Destin law firm’s real estate department including a Board Certified Real Estate Attorney.
If you are a buyer, seller, lender, or otherwise have an interest in real property in Northwest Florida and have questions or concerns regarding a title issue, we invite you to call our Destin title insurance attorneys at (850) 477-0660 or tell us about your needs online.