SEMO Title FAQs
Title insurance can be complicated. It’s important you know the facts to make the best decision when protecting your ownership rights for your investment at closing. Here’s some quick facts about title insurance. We hope it makes your life a bit easier.
What does a title company do?
Title companies are often behind the scenes. The work they do helps ensure a successful closing on the property between all parties.
Title company responsibilities:
- Chain of Title research
- Lien research
- Abstract preparation and title opinion
- Title Commitment Preparation
- Owner’s and Lender’s Title Policies
- Lender and buyer insurance policies
- Closing/settlement services
All of these key elements of a closing, your title company can take care of.
What is Title Insurance?
Title insurance protects both lenders and buyers from facing financial loss due to defects in the property not disclosed by public record. Buyers and lenders receive confirmation that you own the property, subject only to easements, etc., disclosed in land records and noted in your policy.
Why do I need it?
Buying an owner’s title insurance policy is optional. But it can save you some major headaches down the line. A title insurance policy can protect the buyer from:
- Ownership from another party
- Incorrect signatures on documents, forgery, and fraud
- Flawed records
- Outstanding lawsuits or liens
- Property line issues
A lender’s title insurance policy can protect the lender from any issues (legal, financial, etc.) not found in the initial title search, such as someone coming forward with a claim on the property.
What does it cost?
Unlike other insurance policies that require annual or monthly premiums to keep coverage, you only pay for title insurance once in the form of an up-front fee. Then you’re covered for the time that you own the property. The actual cost is different from policy to policy, but with both a lender’s and owner’s policy, the national average cost is approximately $1,400.
What is a Title Search?
A title search will be ordered by your mortgage lender before your home loan closes. The title company will search public records for any title defects — liens, easements, encumbrances — that may affect property rights of the buyer or lender.
Public records a title company searches include deeds, mortgages, divorce decrees, court judgments, tax records, and child support orders, among others. If any defects are revealed in the search, the title company will attempt to resolve them. In some cases, the buyer’s and seller’s real estate agents will work together to get the seller to resolve the issue. In other cases, these problems can be significant enough to completely derail the transaction.
A thorough title search helps reduce the risk of problems with a title in the future, and makes the title policy a valuable investment.
Why do both my lender and I need a policy?
The lender’s policy protects the lender’s investment/equity in the property, but without an owner’s policy, the owner can still be held accountable for claims brought against them. With both a lender’s and owner’s title insurance policy, the title company takes on that responsibility on behalf of both parties.
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Title Work A-Z
We are a detailed bunch. We thrive on information. We just assume everyone else does, too. To guide you in asking the right questions of your lender in choosing your title insurance partner, here’s a glossary of industry jargon that might save you some time.
Written timeline of all recorded proceedings and documents related to a piece of real estate property. Determines if there is any type of claim against a property.
Party responsible for researching all documents and activities that affect ownership of properties, including public records, for mentions of liens, bankruptcies, land boundaries, etc.
Chain of Title
History of ownership of a piece of property. Follows the transfer of the property from one person to the next through each succeeding deed, will, etc.
A.K.A “escrow” or “settlement”; process of executing legally binding documents, including deeds and mortgages commonly associated with real estate purchasing and borrowing of money to assist in purchasing.
The date set by a settlement agent for the signing of a title by the buyer and seller.
Document used to transfer ownership of property from one party to another.
A.K.A “good faith deposit”; Money put down by the buyer to illustrate their intent to purchase the property.
Right to non-possessive use of land or a property in a limited manner. I.e., a utility company has an easement over running water in underground pipes.
Intrusion on property rights by building beyond land boundaries.
Provisions that restrict or enhance title insurance coverage. Most often necessary in the event of a custom policy or when more detailed property protection is provided.
Depositing with an impartial third party, usually the title company, of anything pertaining to a real estate transaction. This usually includes money and documents of all kinds to be disbursed and delivered to the rightful parties after all transaction conditions have been met.
Mortgage with primary claim or priority over any other liens on the property.
Party receiving the property, or buyer.
Party initially in possession of the property, or the lending institution/seller.
Certain coverages in homeowner’s insurance, including fire, vandalism, theft, etc.
Agreement for compensation to be provided in the event of damages or loss which frees the holder from legal liability, responsibility or financial burden.
Foreclosure that results in a Judgment of Foreclosure and Sale; a result of legal or court intervention in response to unpaid debts or mortgages on a property.
A.K.A “creditor”; Financial institution or mortgage bank responsible for offering and underwriting home loans.
A.K.A “hold on property”; Claim by a creditor against property held as security for debt payment.
Legal agreement between a buyer and lender that the lender has the right to repossess the property in the event that a loan, plus interest, is not paid back.
A.K.A. “occupancy date”; The actual date that the buyer will begin to occupy the property.
Rights to property as a result of a lawsuit where the court divides the property between parties, or orders proceeds be divided upon a property’s sale.
Any piece of property including land or buildings.
Real Estate Transaction
Transactions involving real estate property.
One who acts as an agent for sale and purchase of real estate property.
Property rights concerning the allocation and use of water contained within property lines, such as rivers or streams.
Minimum distance from the edge of the property line where structures or improvements must be built as specified by zoning ordinances and deed restrictions.
Exchange of funds and documents between buyer and seller to transfer ownership of a property.
The party that prepares customer documents for title transfer. Depending on location, this could be an attorney, title company, or escrow company.
Promise to issue a title insurance policy on a piece of property.
Mistakes or issues with a title. Can include another person claiming ownership interest, improperly-recorded documents, liens, and easements covered by the title insurance policy.
Insurance that protects real estate owners and lenders against property damage or loss due to title defects.
Process through which ownership or right of use of property is transferred between parties.
Analyzes the risks and profitability associated with insuring a property.
Illegal act of lending funds with rates of interest above the maximum amount allowed by the state.
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