Frequently Asked Questions for Homeowners
Title insurance protects the property owner and the lender against future claims for any known defects in title at the time of sale. These defects can include fraud, forgery, unpaid real estate taxes, judgements & liens against prior owners or other encumbrances not discovered in your title report.
Generally, when you purchase a home, you get both an owner’s and a lender’s policy. If there is no mortgage on the property, there is no need for a lenders policy. If you purchase both an owners and loan policy at the same time you will get a reduced rate on the loan policy often called a simultaneous rate. Unlike other insurances, title insurance is a one-time fee paid at closing.
The owner’s policy protects the owner for the duration of his or her ownership for the full sales price of the property. The lender’s policy protects the lender for the loan amount and decreases as the mortgage is being paid off.
There are two main types of title insurance policies that can be purchased. A standard ALTA Policy and a TOEPP Extended Policy. The TOEPP Policy offers enhanced protection, and its premium is 20% more than the standard policy. The policy amounts are based on the purchase price and are regulated by the state.
A list of benefits of the TOEPP Policy vs. the standard ALTA Policy can be found here.
Informational video on the TOEPP Policy can be found here.
When you purchase a home, your attorney will select which company to order your title insurance policy. Despite payment coming from the buyer, it is customary for the attorney to place the order on the buyer’s behalf because your attorney will be the one who reviews the report and works directly with the title company to clear up any potential issue. However, the homebuyer does have the right to select which company to order the title search from. There are two things a buyer can do to make sure a reputable title company is selected by their attorney: make sure your attorney is using a title company that underwrites its policy with strong underwriters and question the attorney as to whether he has a monetary interest in the title company. An attorney must disclose to his client if he is affiliated with and has monetary interest in a title company.
Your title bill will depend on the purchase price and loan amount of the property you are purchasing as well as the type of insurance you decide to take. Title insurance premiums are state regulated, as such the premium portion of the title bill is the same for every buyer. On your title bill you will see additional charges besides the premium amounts. These items may include real estate taxes due, mortgage tax, building department search fees and recording fees. Mortgage tax, real estate taxes and transfer taxes are pass through charges that the title company collects for you and pays to the state and local municipality.
To get an estimate of your title charges click here.
For a tutorial on using our rate calculator click here.
The final step of the homebuying process happens at the closing table. The attorneys for the buyer, seller, and lender, along with the title closer and the buyers and sellers will generally be present at the closing. Your attorney will obtain a final title bill prior to closing along with your mortgage fees and will advise you as to what checks to bring to the closing. Your job on closing day is mostly to sign documents which your attorney will explain to you. The title closer will be there to issue your title policy, collect the fees and collect the necessary closing documents to be recorded post-closing. The closing table is also where the sellers’ mortgage(s) are paid off from the seller’s proceeds and the attorneys and brokers collect their checks. At the end of the closing, you will have the keys to your new home, along with a copy of your deed!
When you refinance the lender will want a new policy to insure their loan and to protect its interests in your property. The cost for this new policy is paid by the borrower of the loan. When you refinance, your current owner’s policy will remain in affect. The policy purchased for the lender may be eligible for a reduced premium rate. Eligibility depends on several factors.
The TOEPP Extended Policy covers post-closing fraud. Recently many companies out there are offering a monthly paid for service which will alert the homeowner if a deed or other document is recorded against your home. Touting a possible deed theft, these companies are only offering alerts without a solution for the possible theft. These alerts do not provide the same protection to the homeowner that a TOEEP Insurance Policy provides. These companies will alert you, but will not remove or otherwise deal with the post-closing issue. Currently, many counties are now offering, free of charge, the ability to sign up for alerts for documents recorded against your property. These free alerts are identical to the paid for alerts.
Click on the video here for a tutorial on how to sign up for property alerts.
Coops are not considered real property since purchasing a coop means you are acquiring shares in a corporation. When you are purchasing a coop your attorney will order a search on the unit which will disclose any open mortgages, judgments, liens, and bankruptcies. If you want extra protection you can purchase a leasehold policy. You should also discuss this with your attorney.
Click here for information.
Although a new survey is not required for the issuance of a title policy, a new survey is recommended when purchasing your home. Typically a title company will try to locate an existing survey by requesting one from the current owner (seller) and/or any prior title companies that have insured the property.
If a survey is not located, the purchaser is responsible to purchase one, generally ordered through the title company.
If a preexisting survey is found, it can be updated and certified to the new buyer, or the title company can conduct a physical inspection and advise if there have been additional changes to the property since the date of the last survey.
Even if a prior survey is found, you can purchase a new one if you have any concerns.