If you’re paying for a title search, do you really need title insurance? Currently, we’re working with a buyer from Canada. He’s an investor that has bought many properties in Canada but was shocked to hear that real estate in the United States does not typically involve lawyers. That’s because of title insurance.
Real estate can get messy. As real estate investors ourselves, we would never purchase property without title insurance. Why? Because there are issues that even the best title searches can miss. Plus, compared to the cost of fixing any potential problem, the cost of title insurance is a one-time low price to pay.
What’s the purpose of title insurance?
Title insurance protects you from a financial loss related to the ownership of a property. This could be a mistake in the ownership history, an oversight committed by the title researcher, or even a previously unknown heir. Maybe there's a pending lawsuit or legal judgment. A title issue could even mean fraud was involved. Any defect that arises after closing could mean a variety of legal costs and, in a worst-case scenario, the loss of your property plus all the money you’ve put into it.
Is title insurance required in the state of Florida?
If you are buying or selling real estate in Florida, more times than not you’ll be required to purchase title insurance. It’s important to do your research on the costs of buying or selling your home so that you are educated and prepared. Florida’s real estate laws require you to purchase title insurance when obtaining a mortgage. So, what exactly is it, who pays for it, and what will it cost?
Types of title insurance policies
There are two policies in the mix at a home loan closing: the lender’s policy, which is required, and an optional owner’s policy. It is important to note that both are a one-time, upfront cost. This does not get added as a monthly premium to your mortgage payment.
The lender’s title insurance policy protects only the lender from any costs that might be involved with potential issues that arise. The owner’s title insurance policy is optional but comes highly suggested. This will protect you, the buyer, from footing the bill for the costs of resolving a potential title claim. Claims can range from hundreds to hundreds of thousands of dollars. It might seem like there’s cost after cost associated with the purchase of a property, but again, it could end up saving you money in the long run.
Who pays for title insurance in Florida?
In the state of Florida, the seller typically pays for title insurance. However, this depends on which county you live in. For instance, in Lee County, the seller pays for the title insurance but in Collier County, the buyer pays for it.
How much is title insurance in Florida?
The state of Florida determines the cost of title insurance. The cost usually averages around $500-1500 but there are different variables that affect the cost. To calculate the owner’s title insurance price, you will need to know the title insurance rate.
- The rate is $5.75 per thousand for the first $100,000. 575
- $100,000-$1,000,000 is $5.00 per every thousand.
- $1,000,0000-$5,000,000 policy costs $2.50 per every $1,000
For example, a $300,000 owner's title insurance policy will cost $1,575 in Florida.
As with many only insurance policies, the cost of title insurance can seem like a waste. But we urge you to spend the few extra dollars up front that could save you from potentially losing your home.
