Title Services for Residential Purchase Transactions | Topouzis & Associates, P.C.


September 19, 2022

Title Services for Residential Purchase Transactions

There are several different title services that you may need to close on your home purchase transaction successfully. The most common title services are attorney title examination, underwriting title insurance, closing attorney review of title documents, and escrow instructions. Let’s look at each of these services in more detail to understand how they can help your residential purchase transaction smoothly from start to finish.

What Are Title Insurance and Settlement Services?

To close a real estate transaction, both buyer and seller are protected by Title Insurance, Settlement, and Escrow Services provided by real estate closing attorneys. Title insurance protects a borrower if an error is made during escrow that causes the title to be flawed. A title attorney will be able to explain to you what types of errors or omissions can void your home purchase’s title insurance policy. Title Insurance covers loss due to specific defects in title, such as missing heirs, forged deeds; undisclosed heirs; unpaid mortgages or liens; incorrect property description (such as legal descriptions); invalid property boundaries, clouded titles, etc.

Why Do I Need Title Insurance?

If you purchase a residential property, your lender almost always requires title insurance. If someone else owns a piece of property and they owe money on it, it is possible that they may not acknowledge that property. Title services help ensure that any previous owners have officially transferred their ownership to you so you can share it with your bank. Title companies are staffed with attorneys who understand laws for each state as well as rules set forth by lenders. This can save significant headaches if anything goes wrong with your transaction or property. Title Attorneys specialize in real estate law and will be able to answer all your questions about title issues.

What’s Included in Title Insurance?

Title insurance protects a property owner from financial loss due to defects in the title. It covers losses after you purchase your home, up until it’s paid off. Title insurance policies typically cover errors or omissions made by sellers, buyers, and agents who prepare closing documents such as deeds and mortgages. In addition, title insurance protects against any unpaid mortgage debt still owed on a property. Title insurance is usually included when you buy real estate but can be purchased separately. When purchasing title insurance, keep in mind: Title Insurance Coverage: There are two types of title insurance coverage – Basic Coverage and Additional Coverage.

When Do I Need To Get Title Insurance?

The most common question I get is, do I need title insurance? This is a loaded question, and it has several layers. Let’s start at ground zero and talk about why title insurance exists in the first place. Title insurance protects you against title defects you may not be aware of when you purchase real estate. It protects your investment by reimbursing you for any financial loss suffered as a result of an undisclosed defect in title to real property.

Should I Buy A Lender’s Policy or An Owner’s Policy?

There are generally two types of title insurance policies an owner or buyer can purchase when buying real estate, a lender’s policy and an owner’s policy. You must buy an owner’s policy if you have a conventional loan with your down payment. If you have cash or another non-conventional funding method (VA loan, etc.), you will usually be required to buy a lender’s policy.

When Can I Cancel My Title Insurance Policy?

When you are purchasing a home, you need title insurance. Title insurance protects your investment should any property ownership issues arise later. Many assume their real estate transaction must run its course before they can cancel their title insurance policy, but that’s not true in all cases. When you’re ready to cancel your policy, ask us for more information about how to proceed. We’ll tell you everything you need to know so that you can save money.

How Long Does Title Insurance Last?

Title insurance policy coverage begins at closing, and all lenders require you to purchase a title insurance policy. In most states, title insurance coverage lasts one year from close, but it can be canceled earlier if you sell your home before that time. After your title insurance policy expires, lenders may require additional documentation to prove ownership of your property. If you fail to provide acceptable proof after your title passes, sellers could be liable for any later claims.