Black Enterprise: What is title insurance?
Adelman: When a person buys a property or a bank gives a loan to a person that owns a property, the insurance company guarantees that they will not have a problem either financially or legally as a result of what may have happened to the property before they bought it. It ensures that there is no fraud, liens
B.E.: What is a title report?
Adelman: A title report is a compilation of items that could cause concern to a purchaser or lender about the property and/or about the individual buying or selling the property. It includes a description of the property, names of titleholders, the liens that could affect the title, and all the possible things that have to be cleared up in order for the buyer to purchase the home and get insurance without a problem. For example, it will provide information such as the Certificate of Occupancy, list any back taxes, and investigate if the owner is a terrorist or if they are bankrupt.
B.E.: How much does it cost?
Adelman: In metropolitan residential areas a title report ranges from $250 to $450. (Check with your real estate attorney for your area.) Title insurance is a one-time fee paid at closing that covers the insured party for any claims and legal fees that arise out of any problems that are found. This fee is collected by the title company and pays your state taxes, city taxes, and the title company’s fee. The cost of title insurance varies, but the greater the purchase price of the home, the greater the title insurance.
B.E.: Is it required for home purchase?
Adelman: The bank is going to make you take title insurance to protect their interest. They’re not loaning money unless they know they have an insurance policy to back it up. For example, if there is a judgment against the seller for $1,000 and then the seller sells the property, the bank has the right to go after the seller or the recent buyer because they inherited a property that had a lien notice in the court records. The bank can elect which person to sue because the lien wasn’t settled at the closing.
B.E.: Who is responsible for requesting a title report?
Adelman: Usually the attorney requests the report because they are responsible for viewing it, but a buyer or seller can request a report and find
Other posts in The Homebuyer’s Toolkit series:
Getting Started
LaToya M. Smith is a staff writer at Black Enterprise