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General FAQ's
What is title insurance?
Title insurance is an insurance policy that protects the insured
against loss of their interest in the property due to legal defects in
title, which problems where present prior to you taking title to the
property.
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Why is title insurance important?
The purchase of a home or other real estate is generally a
significant investment, having title insurance can save you money, time,
trouble and even your home, if a problem arises in your title.
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What types of coverage are offered?
There are two types of coverage offered. The first is a Lender’s
Title Policy – this type of policy protects the Lender involved in the
transaction (the Mortgage Company) to the extent of their loan. It does
not protect the homeowners’ interest. This policy is generally a
condition of your mortgage. The second type of coverage is the Owner’s
Title Policy. This policy is optional, and it offers the homeowner
protection against loss of their interest in the property due to a title
problem arising, subject to the terms of the policy
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What is a title
search?
A title search is a review of the land, court and municipal records
pertaining to the property. In conducting a title search, the settlement
agent/attorney will confirm that you are purchasing the property from
the legal owner, that after settlement all prior liens will be
satisfied, that the property will pass free of legal attachments, that
the title to the property will be marketable, and to discover any
burdens or restrictions effecting the property.
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If a title search is conducted, why is title insurance still
important?
Although a title search is conducted, the search could still fail to
detect some problems that may affect your interest in the property. Some
examples of these types of problems are: 1) incorrect information in the
public records, 2) unsatisfied liens against the property, 3) claims to
ownership from an undisclosed interest (i.e.: missing heirs, marital
interests, 4) invalid deeds and/or transfers, 5) fraud or forgeries.
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What is a ground rent?
The typical ground rent situation is a 99-year lease, renewable
forever, which subjects the owner of the house to pay a "rent" for the
land. So long as the ground rent is current, the owner of the land
cannot remove the owner of the improvements from the property. The
ground rent is identified by an annual payment, which is usually payable
in semi-annual installments. Generally, ground rents are redeemable, however those that were created prior to 1884 may not
be redeemable. It will be necessary to verify the owner and current
payment status of a ground rent in conducting the closing. Please
provide this information to the closing agent as soon as possible to
avoid unnecessary delays.
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What is a HUD-1?
A Hud-1 is the form used for the settlement statement. This form
identifies and discloses all of the charges applicable due to the
transfer or refinance of the property. It also allows for adjustments or
peroration of expenses paid for the property over time, for example –
water bills, tax bills, homeowner association fees, condominium fees and
other assessments. All closing costs are represented on this statement
to identify the bottom line paid for the property by the buyer and the
bottom line received by the seller.
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What does title
insurance cost?
Title Insurance premiums vary from state to state, but are set
within the jurisdictions with the Insurance commissions or agencies. It
is a one-time premium and the coverage afforded by the policies last for
the duration of your ownership in the property or the existence of the
loan depending on the type of policy issued.
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What is the difference between Title Insurance and other types of
Insurance?
The main difference between title insurance and other
insurance policies is that title insurance protects the insured party
against defects in title that may arise as a result of prior ownership.
Other insurance policies protect the insured from loss as a result of
future actions and not against prior acts or omissions.
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What happens at closing?
Closing or settlement is the point in time when ownership is
transferred or the owner refinances the property. Various people could
be present at closing – these may include the closing agent, you, the
seller, real estate professionals involved in the transaction, and bank
agents. At closing, all documents necessary to transfer and insure the
property will be explained and executed by the necessary parties.
Additionally, if a lender is involved, all documents necessary to create
the new mortgage against the property. All title costs and settlement
costs will be collected in addition to the consideration in the
transaction. All funds involved in the closing will be placed in an
"escrow account" to assure their proper handling and disbursement. This
is your opportunity to ask all the questions you have developed during
the contract period, because when you leave the closing the property
will have transferred and/or have had financing put in place, creating
a lien against the property.
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Go here for
details on the closing process.
"Copyright 2000-2002, The Security Title Guarantee Corporation of
Baltimore"
Contact
Layne Dodd at 1-800-769-2912 to find
out more.
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