Title Archives

How long do property title insurance policies last?

Why Do I Need a Policy?

There’s a very good chance the house you’re purchasing has gone through a few ownership changes. In all this time, there may have been unknown liens, errors in public records, a third party’s claim over the property, or boundary disputes. The good news is that a property title insurance policy protects you from any of these problems as well as additional problems connected to the title of a home.

How Do They Benefit Me?

Title insurance protects owners from liability from overlooked home defects, for instance. These also include forged documents, unexpected heirs who claim the home after the sale of the property, back taxes, and withdrawal of the closing process by either the buyer or lender.

Property records are searched to make sure there aren’t any errors or omissions, liens, or frauds. This policy is true assurance that the seller owns the property and can sell it freely.

So How Long Does Coverage Last?

This coverage is in effect for as long as the property buyer owns the property. Many are surprised to learn that the owner’s legal heirs are also covered for this length of time.

The average policy is pretty standard. Additional coverage isn’t commonly needed, however, if you believe you have good reason to purchase a policy that is more extensive, go for it! Since most families tend to own homes for years, it’s very likely they’ve forgotten about their title insurance policy. The papers might be sitting at the back of a drawer you haven’t seen in a while!

This doesn’t mean the coverage is expired, and it doesn’t mean you have any reason to believe you don’t have it any longer. The majority of owner policies are in effect indefinitely.

For any questions about your title policy, what it entails, and how long you’re covered for, contact your provider. They should be able to send you the paperwork with all the details.

What is Earnest Money?

Putting down earnest money is the confirmation of an agreement between a buyer and seller. It’s also an indication that the buyer is willing to follow through with the agreements written out in the contract.

While a real estate broker usually holds the deposit, it can also be held with the buyer or in an escrow account.

A seller usually will not accept an offer without an earnest money deposit!

What’s great about this concept is that it essentially takes the house off the market, making it unavailable for anyone else to purchase. If all goes according to plan, these funds eventually act as part of the down payment on the property.

So how much should you put down? Initially about 1-3% of the price of the home. This means that a $150,000 home should have an earnest money deposit ranging from $1,500 to $4,500. Other sellers may ask for a straight fee instead of a percentage.

How do you track the money?

In Florida, a rule that went into effect December 2007 provides a method for tracking the progress of a buyer’s deposit when the contract calls for it to be held by an attorney or a title agent. Rule 61J2-14.008(b) states that the name and address of the escrow agent involved must be listed on the contract form. Additionally, the broker must contact the escrow agent via written inquiry no more than 3 business days after contract acceptance and notify the listing agent to confirm receipt of the deposit.

The purpose of this rule is to keep the seller in the loop about whether or not the deposit has been made. According to the Florida Real Estate commission website, myfloridalicense.com, this places the burden of deposit confirmation on the broker rather than the listing broker.

There are some circumstances where earnest money is given back without penalty:

If an appraisal reveals it’s worth less than the asking price. This is because a lender will only pay out the lower number, leaving you to cover the rest. The buyer can then ask the seller to make up for it by covering the closing costs, for example. But if neither party can come to an agreement, the money is given back.
Your financing didn’t quite work out. This doesn’t include when buyers turn down lenders because they didn’t “like” the interest rates offered. The buyer must be denied by a lender within a certain timeline as defined by the contract.
A major flaw is discovered. Home sales are contingent on an inspection. Fixable issues are usually not a problem, but problems with the foundation, electrical wiring, mold, or flooding can cost way more than inspected. You can either renegotiate or simply cancel the contract and back out.

However, keep in mind that if a deal doesn’t make it to the closing table, both parties must agree on who retains the earnest money, depending on certain circumstances. In most cases, the buyer would be entitled to the money he or she put down. However, sometimes the seller can keep the deposit depending on if the buyer failed to meet certain time frames and terms of the contract.

If there is a dispute, the money will be held in escrow by a title company until a resolution is arrived at by both parties. However, the seller may continue with the sale of a property, even while wrapped up in a dispute.

According to Florida statute § 475.25, the broker must return the escrow agreed upon at the mandated date. However, if conflicts continue and the broker has doubts about what the person is entitled to, he or she has the right to notify the Florida Real Estate Commission and has a few options: one, request that the commission submit an order deciding which party is entitled to the funds; two, submit the case to arbitration to settle the dispute on approval of all parties; three, seek judgment from a court; or four, submit the case to mediation with approval of all parties (Legal Beagle).