|
Disclaimer
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.
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.
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.
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.
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.
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.
|
