A Primer on Deeds and Title Insurance Title Insurance
A title insurance policy provides coverage in the event that the there is a financial loss due to flaws in the grantor's legal title.
Lender's Policy: A mortgage is a type of ownership interest in real estate. This type of policy insures the mortgage lender's interest in the title to the property (the collateral for their loan). Most lender's require this type of policy and charge its cost to the borrower at the loan closing.
Owner's Policy: Insures the owner's interest in the property. The premium for this policy is usually small if a lender's policy is also being purchased.
Title Insurance Agents
Most big law firms (such as the ones representing lenders) are agents for title insurance companies and can arrange for coverage. There are also any number of independent title insurance agents that are not affiliated with law firms.
Typically the title insurance agent will also act as the closing agent for the purchase of the property
Title Insurance "Commitment"
The commitment is the insurance company's commitment to provide title insurance. It is not the actual insurance policy. The policy is issued after the deed or mortgage has been recorded.
The commitment states that a policy will be issued if certain conditions are met. The commitment also lists the various types of title flaws that the policy will not cover. In the standard title policy usually issued in Florida, these conditions and exceptions are listed in Schedules B1 and B2 of the commitment.
"Schedule B1": Lists conditions that must be satisfied prior to the issuance of the policy. Typically it will include things such as clearing up a prior owner's judgment liens, existing mortgages, back taxes, etc.
"Schedule B2": Lists that standard exceptions (title flaws that are not being insured against). Typically these include things such as taxes for the current year, easements of record, restrictions shown on a plat map, etc. Schedule B2 exceptions do not have to be cleared up prior to closing (because the policy, when issued, will not provide coverage against the items listed).
Schedule B1 of the title commitment will typically require a survey. If no survey is produced there will be an exception to coverage added to Schedule B2.
A survey is needed because there are potential flaws to title that can not be detected through a mere search of the property's legal description in the Public Record. Title can be lost through the doctrine of "adverse possession”. This happens when someone who is not the legal owner “openly, notoriously, and adversely” occupies a property for 7 years (which is the statute of limitations for trespass) and the legal owner fails to take action to eject them. After that time legal action would be barred and the adverse occupier would be considered the owner. An occupier that acquires title through adverse possession can formalize his or her ownership by filing a “quiet title” action in the courts.
The most common occurrence of adverse possession is “encroachment” which occurs when an adjacent owner (either mistakenly or otherwise) erects a fence or wall
on the wrong side of the boundary thus encroaching upon his neighbor's property. If the victimized owner fails to act within 7 years it may not be possible to use the courts to force the neighboring owner to remove the encroaching wall or fence (because under the law of adverse possession the cut off strip of land now legally belongs to the adajacent owner)
Encroachments can not be detected through a search of the public record. A survey by a licenced surveyor is needed. A survey shows what is actually on the ground.
The only way that "title" to real estate can be transferred (other than through the probate process) is by "deed". The requirements of for deeds are spelled out in Florida Statutes.
Types Of Deeds:
Quitclaim Deeds: conveys whatever title (if any) held by the grantor. The grantor makes no warranties (i.e. promises) about his or her ownership in the property.
Warranty Deeds: The deed contains warranties (or promises) that the grantor has title. Grantor can be sued by the grantee if the title turns out not to be good.
Formalities Of Deed Execution: A deed or mortgage must have been executed with certain formalities in order for it to be recorded. Florida requires the following formalities:
"attesting" (two witnesses to the grantor's signing must sign the deed or mortgage in order to assure authenticity)
acknowledgment (attestation by a notary public or other public officer)