What is Real Estate Title?
Title refers to the concept of legal ownership of a piece of real property. The physical document form of title for a piece or real estate is a deed.
There are many different types of deeds and you should consult with an attorney to determine the proper type of deed that suits you best for your particular transaction.
A common misconception prior to and at closing is that Closing Protection Coverage protects your title for the property. Closing Protection Coverage is protection for you in case the closing agent steals the closing funds or fails to follow closing instructions provided by the parties. Ohio law mandates that Closing Protection Coverage be offered to all parties (seller, buyer, lender) at closing.
Three common examples of Title Assurance
An examination that will provide what the public records show in regard to title. This report is used by an attorney to indicate whether title is marketable. This is not any type of title insurance, just an opinion of title to determine the marketability of title. An Attorney Opinion is only a possible instrument to correct a title defect for 4 years from the date of opinion as the only protection a buyer could have would come as a negligence claim against the attorney.
Certificate of Title
Another form of Attorney Opinion that reflects the marketability of title and the liens and encumbrances attaching to the land. This is not any type of title insurance, just an opinion of title to determine the marketability of title. A Certificate of Title is only a possible instrument to correct a title defect for 4 years from the date of opinion as the only protection a buyer could have would come as a negligence claim against the attorney.
The broadest form of Title Assurance is Title Insurance. Title Insurance policies are contracts between you and an insurance company. Under the terms of the policy, the company ensures that you hold marketable title to the real estate described in the policy. Title Insurance policies cover you against defects of title; however, there are exceptions to coverage that will be contained in the policy, and you and your attorney should carefully review the list of exceptions. A maximum amount of coverage (typically the purchase price) will be listed in the policy if a defect arises that is covered by the policy. The cost of Title insurance is typically higher than an Attorney Opinion or Certificate of Title as Title Insurance covers non-records items, such as fraud, forgery, false impersonation, execution by a minor or insane or incompetent, non-recorded deed(s), undisclosed marriages and/or divorces, but an Attorney Opinion or Certificate of Title do not.
Owner's vs. Lender's Policy
There are two types of title insurance - a lender's policy and an owner's policy. When you obtain a loan, the lender will require that you purchase a lender's title policy to protect their investment in the property. Owner's title insurance is optional, but it protects the homeowner by paying claims and legal fees should a problem arise.
A Lender's Title Policy does not protect the owner, only the lender. A Lender's Policy protects the lender's interest in the property should a problem arise. It does not cover the owner's equity in the property and will not pay the homeowner's legal expenses if there is a problem. Only an Owner's Title Insurance policy will protect the homeowner.
What is the Cost of Title Insurance?
The cost of title insurance is a filed rate with the State of Ohio Department of Insurance and should be consistent by all providers. However the title exam and closing services may vary based on the company you work with. Click Here for a Title Insurance Calculator via First American Title.
How long does Title Insurance last?
Owner's Title insurance is a one-time insurance issuance and will not require additional renewals and does not expire or lapse. An Owner's Title Insurance policy will be in effect as long as the buyer or the buyer's heirs own the property. (A one-time premium for the entire length of ownership)
A Lender's Title Insurance will be in place as long as the mortgage holder maintains a mortgage and promissory note for the property.