Title Insurance: What Do Real Estate Buyers in South Florida Need to Know?
Whether you are buying a home or a piece of commercial real estate in South Florida, purchasing title insurance can help minimize your risk and protect your investment. But, while title insurance has benefits, it also has limitations—and it is important to ensure that you understand these limitations before you sit down at the closing table. Learn what you need to know from an experienced Miami title insurance attorney:
Answers to FAQs About Title Insurance in South Florida
1. What Is Title Insurance?
Title insurance is a type of insurance that protects the policyholder against losses resulting from disputes related to the ownership of the subject property. If a third party claims title to the property—and if the third party’s claim proves to be valid—then the policyholder’s title insurance will cover the policyholder’s losses. However, as we discuss below, there are significant limitations, so it is crucial not to rely solely on title insurance when buying a piece of real estate in South Florida.
2. Are Buyers Required to Purchase Title Insurance?
Buyers are not required to purchase title insurance under Florida law. However, lenders will generally require that buyers obtain coverage. Additionally, while title insurance may not be legally required, purchasing a policy is generally worth the relatively modest investment. This is true whether you are working with a lender or you are a cash buyer.
3. What Does Title Insurance Cover in Florida?
As the Florida Office of Insurance Regulation (FLOIR) explains, title insurance “insures owners of real property, or lenders using real property as collateral, against loss arising out of defective or invalid titles and the existence of other liens or other legal claims against titles to real property.” More specifically, potential issues that title insurance policies will generally cover include:
- Fraudulent and forged prior deeds
- Outstanding construction liens and judgment liens
- Prior owners’ unpaid mortgage debt
- Recording errors (i.e., incorrectly recording a prior owner’s name)
- Unpaid taxes and assessments on the property
With that said, individual policies vary. As a result, to ensure that your title insurance policy provides the coverage you need, you should review it carefully—or have it reviewed by a Miami title insurance attorney.
4. What Doesn’t Title Insurance Cover in Florida?
While title insurance protects buyers and lenders against many types of risks, it does not comprehensively protect against all potential losses. Some examples of issues that typically aren’t covered under title insurance policies include:
- Easements and rights of way that impair clear title to the property
- Tax assessments for new construction dwellings
- Issues with the property itself (i.e., mold, pest infestations or storm damage)
Again, these are just examples. Before you purchase a title insurance policy, you should make sure that you know what it does and doesn’t cover—and you should consult with a Miami title insurance attorney if you have any questions or concerns. As we discuss below, you should strongly consider paying for a title search as well.
5. Do You Need Title Insurance if You Paid for a Title Search?
Along with purchasing title insurance, another way that buyers can mitigate their risk is by paying for a title search. But if you pay for a title search, is it still necessary to purchase title insurance?
The short answer is “Yes.” There is a simple reason why: Title insurance covers issues that you might not be able to discover through a title search, just as title searches can uncover issues that might not be covered under your title insurance policy.
Ownership interests acquired through divorce and inheritance are two examples of issues that might not come up during a title search—but that should be covered under your title insurance policy. Both of these life events can result in ownership transfers that won’t necessarily show up in state records (at least not right away). Purchasing title insurance protects against this risk—among many others—and, for this reason, buyers should generally view title searches and title insurance as complementary.
6. What Happens if Someone Else Claims an Interest in Your Property?
If someone else claims an interest in your property, what happens next depends on the validity of the claim, whether you have applicable title insurance and other factors. Depending on the circumstances, you may need to file a quiet title action, or you may need to file a claim under your title insurance policy.
7. When Do You Need a Miami Title Insurance Attorney?
With all of this in mind, when do you need a Miami title insurance attorney? There are three main circumstances in which a title insurance attorney can help you:
- You Are Preparing to Purchase Title Insurance – If you are preparing to purchase title insurance, a Miami title insurance attorney can review your policy, advise you of its exclusions and assist you with making informed decisions about your coverage.
- You Have Concerns About Obtaining Clear Title – If you have concerns about obtaining a clear title, you should consult with a Miami title insurance attorney in this situation as well. For example, if your title search uncovers any potential issues, you will want to seek legal advice before deciding whether to move forward. Your attorney can further research the issue(s) and determine what options you have available—including whether purchasing title insurance will provide adequate protection.
- You Are Facing a Title Dispute Post-Closing – If you find yourself facing a title dispute post-closing, a Miami title insurance attorney can help you determine what you need to do to protect your interests. If necessary, your attorney can pursue a quiet title action or file a title insurance claim on your behalf.
Schedule a Free Initial Consultation with a Miami Title Insurance Attorney
If you need to know more about protecting your interests before or after buying a piece of real estate in Florida, we encourage you to schedule a free initial consultation with a Miami title insurance attorney at Edelboim Lieberman. Call 305-768-9909 or tell us how we can help online today.