What is the role of a title company when you are buying or selling? A few weeks ago, I did a video about deed states versus title states and I received a lot of follow-up questions from the clients who saw it. To answer those questions and explain the role of a title company when you are looking to buy or sell, I invited Michael Lwin from Nona Title, Inc. to have a conversation about these points.
So, what is the role of a title company when you’re buying or selling a property in Central Florida, which is a deed state? A title company does title insurance. Just like insurance, title companies insure the property and make sure that, if there is a defect in the transfer of the property that you are purchasing, your insurance policy will go into effect. If another person says the property is actually theirs, for example, your policy would help protect you.
A title company takes the contract and initiates two main searches. First, an underwriter does an actual title search which will trace the passage of that property. They make sure the indicated transfers took place and were done under proper deeds. New constructions are obviously easier in this regard.
The second search title companies perform is a municipality search, which will catch things that haven’t been filed such as liens and various permits. There could be permitting liens, utility liens, or property tax liens which the chain of title would never show. However, they could still be attached to that and could be a defect.
Essentially, a title company makes sure that the chain of title for the property is clean. And, it covers the buyers if there are any issues as well as the seller, so they are done with the deal.
But, who pays for it? That depends on the state. In Florida, the seller pays for the owner’s policy and gives it to the buyer to ensure that the buyer is covered in case they lose anything in the process.
If you move to Florida from another state, you have two options for title insurance. You can use an attorney or a title insurance company which is a licensed title agent. They are both governed by the same rules. You can choose to close with either, so look at the fees on a settlement statement. The actual insurance policy is set by the State of Florida to be a certain amount; however, an attorney will have settlement fees.
Some people may be more comfortable using an attorney because that is what they are used to doing. Nona Title has an attorney on staff specifically for those individuals. There is an additional fee, but the attorney can review the policy for them.
If you have any additional questions for Michael, you can contact him at (407) 556-3798 or visit his website at www.nonatitle.com.
If you have any additional questions for me or are interested in buying or selling, please feel free to call or email me. I look forward to speaking with you soon.