- Slides: 36
Title Insurance Overview • • What is Title? What is Title Insurance? Title Insurance Underwriters Types Of Title Companies in Texas Types of Title Insurance Title Commitment Cost Of Title Insurance Q&A
Title • A title is the collective ownership records of a piece of real estate, including the transfer of any property rights and any loans using the property as collateral.
• A clear line of title makes you much less vulnerable to ownership claims from other parties and to any outstanding debts of previous property owners.
What Is Title Insurance • Title insurance protects you and your lender if someone challenges your title to your property because of title defects that were unknown when you bought the policy.
• Title Insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens.
• Title insurance is meant to protect an owner's or a lender's financial interest in real property against loss due to title defects, liens or other matters.
Major Title Insurance Underwriters • • First American Title Insurance Fidelity National Financial Title Group – Fidelity National Title – Chicago Title – Commonwealth Title – Alamo Title – Lawyers Title – Ticor Title Stewart Title Guaranty Old Republic National Title Insurance
Texas Market Share (as of 9/30/2012) First American Title Ins. Co. 21. 5% Stewart Title Guaranty Co. 18. 8% Fidelity National Title Ins. Co. 14. 9% Chicago Title Ins. Co. 12. 7% Old Republic National Title Ins. Co. 7. 1% Title Resources Guaranty Co. 6. 3% Alamo Title Ins. Co. 4. 2% Commonwealth Land Title Ins. Co. 2. 9% Alliant National Title Ins. Co. 2. 4% WFG National Title Ins. Co. 2. 2% National Title Ins. of NY 2. 2% National Investors Title Ins. Co. 1. 6% Westcor Land Title Ins. Co. 1. 3% North American Title Ins. Co. 1. 0% First National Title Ins. Co. * 0. 5% Premier Land Title Ins. Co. 0. 4% Southern Title Ins. Corp. ^ 0. 00% TOTAL 100%
Types Of Title Companies In Texas • Direct Operations of a Title Insurance Underwriter. • Licensed Title Agency • Fee Attorney
Title Insurance Policies • Owner’s Policy • Loan/Lender’s Policy
Owner’s Policy • Owner’s Policy of Title Insurance - The owner's policy assures a purchaser that the title to the property is vested in that purchaser and that it is free from all defects, liens and encumbrances except those listed as exceptions in the policy or are excluded from the scope of the policy's coverage.
Loan Policy • Loan Title Insurance Policy - This is sometimes called a lender’s policy and it is issued only to mortgage lenders. • Generally speaking, it follows the assignment of the mortgage loan, meaning that the policy benefits the purchaser of the loan is sold.
• For this reason, these policies greatly facilitate the sale of mortgages into the secondary market.
What a Title Policy Covers? • If someone claims an interest in your property, a title company will defend your title in court and pay for any actual loss under these circumstances:
• A lien is filed against your title because a previous owner failed to pay: – a mortgage or deed of trust – a judgment, tax, or special assessment – a charge by a homeowners or condominium association
• There is a lien on your title for labor and materials furnished by a contractor without your consent. • There are other liens or claims against your title that aren’t listed in the policy exceptions.
• Leases, contracts, or options on your land weren’t recorded in the public records and disclosed to you.
• The title policy failed to disclose legal restrictions on how you can use your property. • There is an easement that isn’t in public records and that you don’t know about. The title policy assures you a legal right of access to your property.
• Someone didn’t properly sign the chain of title, or a notary public made an error on the document, made an error in recording the document at the county clerk’s office, or failed to deliver the deed according to statutory requirements.
• A deed or other document in your chain of title is invalid as a result of forgery, fraud against the rightful owner, a signature given under force, or a signature given by a person legally incompetent to sign or claiming to be someone else.
What a Title Policy Doesn’t Cover? • Problems with your title that occur after the date you purchased the policy. • Problems that you create or from problems unrelated to your or the lender’s property interests.
• Any special exceptions – such as a public utility easement – added by the title company during the title examination process. These exceptions must be listed in Schedule B of your policy.
• The penalties of your failure to pay for your property. • An unrecorded title defect that you knew about or allowed to occur.
• Violations of building and zoning ordinances and other laws and regulations related to land use, land improvements, land division, and environmental protection.
• Restrictive covenants limiting how you may use the property and stating the requirements for buildings constructed on the property. • Losses resulting from rights claimed by “parties in possession, ” such as renters or anyone else occupying the land. If you object to the exception, the title company may inspect the property and delete the exception from your policy. The title company may charge for the inspection.
• Condemned land, unless a condemnation notice appeared in the public record on the policy date or the condemnation occurred before the policy date. • Homestead, community property, or survivorship rights of a policyholder’s spouse.
• Title irregularities arising from a deceased person’s estate, a bankruptcy estate, or a trust. • Claims from other people who may have certain rights if your property is near a body of water or has a river or stream flowing through it.
Title Commitment • The purpose of the title commitment is to provide the terms and conditions on which the title company will be issuing a title policy. • It is a commitment for title insurance.
• A Texas Title Commitment contains 4 sections: – Schedule A – Schedule B – Schedule C – Schedule D
Title Commitment- Schedule A • Contains: – Policy Amount – Proposed Insured – Loan Policy Amount – Proposed Insured – Proposed Borrower – The Interest in the Land – Name Of the Record Title to the Land – Legal Description
Title Commitment - Schedule B • Contains items that will remain with the property: – Restrictive Covenants – Any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments – Homestead or community property or survivorship rights – Any title or rights asserted by anyone – Standby Fees, Taxes and assessments by any taxing authority – Liens and Leases – Easements
Title Commitment - Schedule C • Contains items that will need to be satisfied and removed: – Any defect, lien or other matter that may affect title to the land – Voluntary Liens – Partnership Requirements – Acceptable Survey Requirements
Title Commitment – Schedule D • Indicates the Title Insurance Underwriter • Indicates the Title Insurance Agent – Shareholder, owner, partner or other person having or controlling one percent (1%) or more of the Title Insurance Agent – Estimated Premium – Who retains what percentage of the premium
Cost Of Title Insurance • The premium for a title policy is paid only once, at the closing of the sale. The buyer and seller may negotiate who pays the premium.
• Title insurance premium rates are set by the Texas Department of Insurance (TDI) and are based on the property’s sale value using a sliding scale. For example, the basic premium for a $50, 000 property is $503, and the basic premium for a $100, 000 property is $843.