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F. Securing Title Services
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Title insurance is usually required by the lender to
protect the lender against loss resulting from claims by others against your
new home. In some states,
attorneys offer title insurance as part of their services in examining title
and providing a title opinion. The
attorney’s fee may include the title insurance premium.
In other states, a title insurance company or title agent directly
provides the title insurance.
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Owner’s Policy: A lender’s title
insurance policy does not protect you.
Similarly, the prior owner’s policy does not protect you.
If you want to protect yourself from claims by others against your
new home, you will need an owner’s policy.
When a claim does occur, it can be financially devastating to an
owner who is uninsured. If you buy an owner’s policy, it is usually much less
expensive if you buy it at the same time and with the same insurer as the
lender’s policy.
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Choice of Title Insurer: Under RESPA, the
seller may not require you, as a condition of the sale, to purchase title
insurance from any particular title company.
Generally, your lender will require title insurance from a company
that is acceptable to it. In
most cases you can shop for and choose a company that meets the lender’s
standards.
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Review Initial Title Report: In many
areas, a few days or weeks before the settlement or closing of the escrow,
the title insurance company will issue a “Commitment to Insure” or
preliminary report or “binder” containing a summary of any defects in
title which have been identified by the title search, as well as any
exceptions from the title insurance policy’s coverage.
The commitment is usually sent to the lender for use until the title
insurance policy is issued at or after the settlement.
You can arrange to have a copy sent to you (or to your attorney) so
that you can object if there are matters affecting the title, which you did
not agree to accept when you signed the agreement of sale.
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Coverage & Cost Savings: To save
money on title insurance, compare rates among various title insurance
companies. Ask what services
and limitations on coverage are provided under each policy so that you can
decide whether coverage purchased at a higher rate may be better for your
needs. However, in many states,
title insurance premium rates are established by the state and may not be
negotiable. If you are buying a
home, which has changed hands within the last several years, ask your title
company about a “reissue rate,” which would be cheaper.
If you are buying a newly constructed home, make certain your title
insurance covers claims by contractors.
These claims are known as “mechanics’ liens” in some parts of
the country.
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Survey: Lenders or title insurance
companies often require a survey to mark the boundaries of the property.
A survey is a drawing of the property showing the perimeter
boundaries and marking the location of the house and other improvements.
You may be able to avoid the cost of a complete survey if you can
locate the person who previously surveyed the property and request an
update. Check with your lender
or title insurance company on whether an updated survey is acceptable.
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