weekly home buyer blog – Title Insurance

by | Jun 3, 2012 | Real Estate | 0 comments

Happy Sunday!

Today my son informed me he only had 10 more days of his sophomore year, and oh, by the way, 5 of those days are 1/2 days!  What?!  Really?!?!  My response is to wonder why they have 5 days of early release…I mean, what is the point??  Of course, my other reaction is to wonder where the time went!  LOL  Is it just me or is this year just flying by????  It is has been a year of really high highs, and really low lows though, so no wonder it is flying by!
I have been busy lately taking classes for my real estate license, which I need to renew this next month, and with a couple of other things.  I have been working on places for classes that  works for everyone, and places in which to advertise for the free community home buyer classes.  A couple of folks have said I should put out some flyers at churches, other people asked about their gyms.  I am open to any suggestions, and help.  Of course, honestly, the best way to get out the word about the classes is YOU!  Word of mouth, and referrals, is always the best way to get the word out about the classes, so thank you again!  😀  Another thing I am working on is how to get these emails on pinterest?  Anyone know?  🙂
 
Title Insurance….
There are 3 different insurances which every buyer needs to be aware of….homeowners insurance, mortgage insurance, and title insurance.  A couple of weeks ago I talked about mortgage insurance, so this week I am going to talk about title insurance.  Next week I will talk about homeowners insurance.
Title insurance is paid for at closing, and is one of those, ‘closing costs’ that we talk about.  This is good insurance for you, but not everyone understands what it does, or how to make sure you are getting the best coverage possible. After you have a signed around purchase/sale agreement your agent will take your earnest money check to the title company, and along with the signed around purchase/sale agreement, open escrow with the title company.  We aren’t going to go into the title company’s full job today, but part of this job is to research the property’s title.  The title company will send you, the buyer, a copy of the title report.  Please be sure to look it over, and if you have any questions, call your title officer.  We all work for you.
The title report will also talk about title insurance, and this is where we are at today.  One of the responsibilities of the title company, as mentioned above is to research the title….look for any ‘clouds’ on it…anything that isn’t clear.  If the title company misses anything, title insurance protects you, the buyer, from being responsible for something before you owned the property….or so it is in its most protective form.
 Let’s say that 6 months after you close and move in, some guy comes to the door telling you that you owe him $8,000 for a roof repair from 1 year ago.  You are floored, and freaked out…of course, and you call everyone you can to see if you are actually responsible for this.  I mean, wasn’t this before you purchased the home?  So how can you be liable?  Well, without the proper protection, you could be!  I can see you now, “say what?!”
There are 3 forms of title insurance…Standard policy, extended policy, and homeowners policy.
One of the forms that a buyers agent may have you sign is an ‘Optional Clause’ addendum, and on this addendum Standard Policy is checked.  YOU DON’T WANT THIS!  It is cheaper for you, but it would not protect you in the case stated above.  Extended policy seems like a good idea, but can be expensive as it requires a professional survey for the property, and still doesn’t provide you full coverage.  What you want, as a buyer, is the HOMEOWNERS POLICY as this is the most coverage you can get as a homeowner, and would protect you in the situation above.  The difference between standard policy and homeowners policy?  About $60-$80.  Title insurance is only purchased ONCE, and that is at closing.  In Washington, Homeowners Policy is standard, and unless otherwise stated and agreed upon in the purchase/sale, what you will receive from the title company.  Remember that this is one of those costs that is part of closing costs, and as a buyer you should be asking for 3% in closing costs from the seller.
Again, if you see the Optional Clause addendum, make sure the standard policy is not checked.  If you are purchasing a bank owned home/foreclosure, or sometimes, even a short sale, only a standard policy will be issued.  My advice to you is to ask for the homeowners policy, and if need be, pay the extra amount to fully protect yourself.
 
So what is Title Insurance? In a nut shell, Title insurance protects you (or your lender) if a lawsuit is filed against the title.Owner’s title insurance, issued in the amount of the real estate purchase, can be bought for a one-time fee and lasts as long as you or your heirs have an interest in the property. The premium charged varies from state to state, but it is usually 1 percent the purchase price of the property, according to the American Land Title Association (ALTA).

Owner’s title insurance fully protects you if a problem surface with the title that was not uncovered during a title search, and pays for any legal fees involved in defending a claim against your title to the property.

Anything you might want to know about your property or its “chain of title” is usually found in a records search. The one-time fee paid for title insurance goes toward administrative fees for searches at large research facilities where the histories of properties and property titles are stored. In some cases, the chain of title could trace back to the early 1800s or when land records were first recorded in the U.S. That is a lot of paperwork. Short searches are common in residential transactions, including searches one to three deeds deep in the chain.

What does it cover?  

Remember that Homeowners Insurance covers ALL of this, and isn’t that what you want??  Full coverage is good!  🙂

Basic owner’s title insurance:

  • Title to the property
  • Incorrect signatures on documents
  • Forgery, fraud
  • Defective recordation
  • Restrictive covenants
  • Encumbrances or judgments against the property
  • Basic lender’s title insurance:

  • Mechanic’s liens and unrecorded liens
  • Unrecorded easements and access rights
  • Defects and other unrecorded documents
  • Extended owner’s title insurance:

  • Building-permit violations
  • Subdivision maps
  • Covenant violations
  • Living trusts
  • Structure damage from mineral extractions
  • Encroachments and forgeries after title insurance is issued

If you know anyone who is thinking about buying a home, our next class is Saturday, June 23, 2012, at the Vancouver YMCA located at 11324 NE 51st Circle from 10am2pm!  With reservations, lunch is included….  :-)Please let me know if you have any questions! And again as always, if you are looking for a buyer’s agent, please give me a call or drop me an email…I would love to help you with your home buying adventure!Please call, email, text, or even facebook me (at Tracie DeMars Real Estate Q&A) anytime with any questions, or if there is anything I can do to assist you with your home buying adventure! As a buyers agent, I am, as always, here to help!! 😀

Thank you again for your business and for your referrals!

If there is anything you would like to see on here…please let me know and I will make it a weekly note!

…as always…if you have already purchased a home, or no longer would like to receive these emails from me, please let me know and I will be happy to remove you from receiving any more.

Thank you again for attending the home buyer education classes, and I hope that you will continue to refer the classes out to your friends, family, and co-workers. Upcoming class dates and times are located at www.freehomebuyerclasses.com.  Just click on the link on the left hand side.  We appreciate your referrals and word of mouth!  Also, if you have somewhere that we can place the flyers at, please let me know….
:-D

Next Week: Homeowners Insurance (aka Hazard Insurance)
Last Week: HUD homes

Remember that you can always go to ‘Free Home Buyer Education’ on Facebook for all of my weekly blogs and upcoming class dates/times/locations. I post the weekly blogs on there as well.

Have a great day, and I will talk to you soon,
;-D

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA
360-903-3504

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