Posts Tagged ‘title insurance’

Re-issue Credit for Title Insurance

Posted on: May 21st, 2012 No Comments

When closing on a home, almost all buyers get title insurance. If the previous owner also had title insurance and certain conditions are met, the buyer may be entitled to a discount on the title insurance premium. Re-issue credit is a discount offered to parties that can prove a previous title insurance policy existed on the real estate being insured. ¬†Because it was previously insured, there’s less risk to the title insurance company and a lower rate will apply. One of three conditions must be met for re-issue credit to be available:

  1. The policy to be issued must have an effective date of less than three (3) years from the effective date of the policy protecting the seller in the current transaction.
  2. The policy must be on real property which is unimproved except for roads, bridges, drainage facilities and utilities where the current owner’s title has been insured prior to the application for a new policy (no time limit).
  3. Loan policies issued on refinancing of property insured by an original owner’s policy which insured the title of the current mortgagor (no time limit).

The re-issue credit will be the difference between the original insurance and the new insurance computed at the original insurance rates. The money a buyer can save with a re-issue credit can be significant: $445 on a $200,000 home. If you think a re-issue credit may apply, make sure to bring it to the attention of your title company before closing.

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What Does a Title Company Do?

Posted on: May 7th, 2012 No Comments

At a real estate closing, a property is legally transferred from one party to another. Closings almost always occur at a title company or a law firm with a title department. A title company has responsibility to make sure that all the documents related to the ownership of a property are in proper order before the real estate transaction closes.

Conducting a Title Search

Title companies will conduct a title search to find out if the person selling the property is legally able to do so. Court records are reviewed to ensure all liens and judgements on a particular property have been satisfied. After the court records have been reviewed, the title company will issue an opinion letter as to whether the property has a clear title. If the title is not found to be clear, the closing cannot proceed.

Issuing Title Insurance

To ensure buyer hold proper and legal claim to a property title, title companies will issue title insurance. These policies cover the owner and lender if legal disputes concerning ownership of the property arise. Since the title company has conducted a title search prior to the close of a real estate transaction, no such issues should arise. In reality, documents occasionally get overlooked or claims are made that can threaten the interests of the owner and lender after the property changes hands. If problems do arise, the title insurance company will compensate the affected parties.

Maintaining Escrow Accounts

When money is deposited by either side of a real estate transaction (binder, monies for repairs, etc.), title companies are charged with holding the money in an escrow account. With the title company acting as an impartial third party, neither the buyer or seller can claim the money was for a purpose other than closing the real estate transaction.

Recording the Deed

A deed or title for a property shows legal ownership for said property. After the close of a real estate transaction, the title company is responsible for seeing that the deed is recorded with the local courthouse. Technically, a buyer does not own a piece of real estate until the deed is recorded. Once recorded, lenders and other parties my apply liens against the real estate.

Closing the Transaction

Title companies preside over the signing of all documentation required for closing a real estate transaction, including all transfer and loan paperwork. The title company acts in the interest of all parties to the transaction. The title company will oversee the exchange of funds between the buyer, seller, and lender (if one is involved). After the closing, the title company will see that all necessary legal documents are recorded with the local courthouse.

 

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