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Title Insurance

What is Title Insurance?

The purchase of a home is, in most cases, the largest financial commitment in an individual's lifetime.

  • Title Insurance protects you against losses due to defects in the title of the property or expenses in legal defense.
  • Your ownership is authenticated and will be promptly defended against any claims, in court if necessary at no cost to you, whether a claim is valid or not.
  • A title insurance policy will protect you and your heirs as long as you have an interest in the property.
  • If a valid claim is made against your title as covered by your policy, the title insurer protects you by bearing the cost of settling the claim should it prove valid, in order to protect your title and keep you in possession of your property.
What are title defects?

Examples of title defects include unpaid taxes, judgments or liens against the seller (or their predecessor in title), unsatisfied mortgages, and restrictions limiting the use of the land. If you have purchased an Owner's Policy, and if some form of defect is discovered after closing, the title insurance will pay for defending against any lawsuit attacking the title as insured and will either clear up those title defects or pay the insured's losses. Moreover, the Owner's Policy remains in effect as long as the insured, or the insured's heirs, retain an interest in the property, or have any obligations under a warranty in any warranty deed of conveyance of it.

How can there be title defects outstanding if a search and policy has been issued on the property?

Title insurance is issued only after a careful examination of copies of the public records. Even the most thorough search cannot absolutely assure that title risks or defects are not present. There could be other title problems that may not be found in a search. These are called "hidden risks" or defects and can cause loss of title and right to ownership or create an encumbrance on the title. The most common of these hidden risks are:

  • false impersonation of the true owner of the property
  • confusion due to similar or identical names
  • undisclosed or missing heirs
  • defective deeds
  • releases or wills
  • instruments executed under invalid or expired power of attorney
  • mistakes or clerical errors in recording legal documents
  • misinterpretations of wills
  • deeds by persons of unsound mind or other form of mental incompetence
  • deeds by minors
  • deeds by persons supposedly single, but in fact are married (i.e. homestead property)
  • liens for unpaid estate, inheritance, income or gift taxes
  • fraud and forgery
Can a married person purchase property individually?

Yes, in Florida a married person can acquire (purchase) and convey (sell) property individually. However, in the case of homestead property, the spouse must join in the conveyance.

Can I put my minor children in the title?

Yes, you can. However, if you decide to sell, since minors lack the capacity to enter legal agreements, a guardian must be appointed by the court of equity. The guardian could be one or both parents or a third party appointed by the court called guardian ad litem. The court gives to this guardian the authority and responsibility to look after the minor's best interests.

If the note is only in my name, why does my spouse have to sign the mortgage?

If the property is going to be the primary residence of the married couple, then it is necessary for your spouse to sign in acknowledgement that he/she knows that the property is being encumbered and that there is a note that needs to be paid by the borrowers' heirs. In short, someone has to keep on paying the mortgage until it is paid in full.

What are the steps involved with "Closing Day"?

  1. Some of the most common requirements prior to closing are listed below. These items need some time allocated to them and the closing date should not be scheduled until all received and approved. These are usually ordered upon final approval since this expense is payable regardless if there is a closing or not. Commonly these are the buyer's cost.
    • Termite Inspection- if it is not clear, the seller will need time to do the necessary repairs.
    • Survey
    • Hazard Insurance
  2. Coordinate closing date and time with all parties. Be punctual ALL PARTIES MUST BRING TO CLOSING DRIVER'S LICENSE OR ID CARD AND SOCIAL SECURITY CARD.

    IF THE BUYERS NEED TO BRING MONEY TO CLOSING IT MUST BE IN THE FORM OF A CASHIERS CHECK PAYABLE TO THE TITLE COMPANY. Therefore, keep in mind that you have to go to the bank prior to closing when choosing the time for closing.

    The closing may be done as a mail away. This means that either party or both will not be attending the closing and the documents are sent via overnight mail to them. This requires that the title closer or his/her processor have the party's phone number to coordinate the exact address to ship the documents to and the time frame needed to return the documents. Usually the real estate professional will find out the possibility of this situation as soon as they get the contract and will alert the title closer from the moment they send the title order.

    It usually takes between an hour to an hour and a half for closing during which time the title closer will be describing and explaining the documents that you will be signing. Please make sure that you allocate enough time for closing.

Homestead Exemption

What is Homestead Exemption?

Homestead Exemption is a partial exemption from property taxes allowed by the Florida Legislature. If you qualify, you will save approximately $500.00 per year on your property taxes.


    To Qualify: You must be a bona-fide resident of Florida, have legal title to your home and make that your primary residence as of January 1st.

    To Get The Exemption: If you are a new homeowner, you must apply in person to the Property Appraiser's Office. You will need your Florida driver's license, a copy of the recorded deed to your home and the social security numbers of all owners listed on the deed. You will be assisted in filling out the required forms necessary to obtain this exemption.

    When To Apply: Between January 1st and March 1st for the current year or anytime after March 1st for the succeeding year.

Automatic Renewal

To ease the burden on taxpayers, the Property Appraisers have begun automatically renewing homestead exemption. As long as nothing has changed and the property in question is still your primary residence, your HOMESTEAD exemption will be automatically renewed each year on January 1st. In January, you will be mailed a renewal receipt identifying your home. If you still live in this house, you need to do nothing; your exemption will be automatically renewed. Just keep the card as your receipt.

Are there any other exemptions I may qualify for?

There are several other exemptions available to qualified applicants. Legally blind persons, disabled veterans, widows or widowers and permanently and totally disabled persons may also receive additional exemptions. For more information contact the Property Appraiser's Office.


    January 1st thru March 1st - Filing of applications for all exemptions for the current year, including Homestead.

    August 1st or thereabouts - Assessment notices are mailed detailing the current assessed value and tax amount based on the proposed millage. Included are public hearing dates for discussion of the proposed millage rate.

    November 1st or thereabouts - Tax bills mailed by the Tax Collector to all property owners.

Where can I get more information and where do I file?

The exemption staff of the Property Appraiser's office is trained to answer all of your questions about HOMESTEAD or any other exemptions. They will also be happy to assist you in filing the appropriate application. If you have any questions, the following link provides you with the addresses and phone numbers of the Property Appraiser's offices in Florida: www.myflorida.com/dor/property/appraisers.html.


Adjustable Rate Mortgage (ARM) - A mortgage in which interest and payment rates vary periodically, based on a specific index, such as 30-year Treasury bills or the Cost-of-Funds index.

Adjustments - Money credited to either/both buyer and seller at closing, including real estate taxes, price adjustments based on disclosures in the inspection, etc.

Affidavit - A written statement made under oath before a notary public or other judicial officer.

Agent - A licensed person who represents the seller (and/or buyer) and who provides market assessment, sales or buying strategy, recommends various services and sources important to the seller or buyer.

Amortization - A method by which monthly mortgage payments are equalized over the life of the loan despite the fact that the proportion of principal to interest changes.

Appraisal - Professional and unbiased written opinion of property’s value based on recent, comparable sales, quality of construction, current condition and style of architecture.

Assessor - A municipal or county official who determines the value of properties for the purpose of taxation.

Assumption of Mortgage - The buyer assumes liability for an an existing mortgage held by the seller, subject to approval by the lender.

Balloon Mortgage - A short-term mortgage, generally at a fixed rate of interest, to be paid back in pre-determined, equal monthly payments, with a large, final payment for the balance of the loan paid at the end of the term.

Broker - A person licensed to represent home buyers or sellers for a contracted fee. Most real estate offices are managed by a broker who employs licensed sales agents to sell the properties.

Cap - A limit on the total amount an interest rate can be increased. (See ARM.)

Cashier's Check - A check drawn by a bank on itself rather than on an account of a depositor. A cashier's check is generally acceptable to close a sale without waiting for the check to clear.

Closing - The final settlement at which time the title is transferred from seller to buyer, accounts are settled, new mortgages signed and all fees and expenses dispersed or satisfied.

Closing Costs - All fees, taxes, charges, commissions and other costs paid by buyer and/or seller at the closing.

Closing Statement - The statement which lists the financial settlement between buyer and seller, and also the costs each must pay. A separate statement for buyer and seller is sometimes prepared.

Collateral - Personal property pledged as the security for a debt. The mortgage is usually the collateral for the property itself.

Commission - A previously agreed upon percentage of the home’s sale price paid to the listing and selling agent(s).

Commitment - Also called "binder." A document issued by a title insurance company that contains the conditions under which a policy of title insurance will be issued.

Conventional Mortgage - Most popular home financing form not insured by FHA or guaranteed by VA. Available from many lenders at varying rates, terms and conditions.

Credit Report - A report outlining the credit history of an individual which includes current and previous debts, payment amounts, late payments and past due amounts and other related information on every credit source the individual has used.

Deed - A legal “instrument” that conveys the title to a property from seller buyer.

Deed Restriction - A covenant contained in a deed imposing limits on the use or occupancy of the real estate or the type, size, purpose or location of improvements to be constructed on it.

Disbursements - Payments made during the course of an escrow or at closing.

Disclosure - Statement concerning the condition of the property for sale and the surrounding area.

Documentary Tax Stamps - Stamps, similar to postage stamps, affixed to a deed, showing the amount of transfer tax paid. Most states now "stamp" the deed rather than actually affixing a stamp.

Down Payment - The buyer’s payment to the seller at the time the sales contract has been mutually agreed to, or at closing, for the percentage of the total purchase price required by the buyer’s mortgage loan.

Earnest Money - Money paid by the buyer at the time an official offer to purchase is submitted to the seller, intended to demonstrate the good faith of the buyer to complete the purchase. Earnest money applied against the purchase price; however, it may be forfeited if the buyer fails to complete the purchase under the terms of the sales contract.

Easement - A right to use all or part of the land owned by another for a specific purpose. An easement may, for example, entitle its holder to install and maintain sewer or utility lines.

Encroachment - Any building, improvement or structure located on one property (such as a wall, fence or driveway) that intrudes upon the property of another.

Encumbrance - Any interest, right, lien or liability attached to a parcel of land (such as unpaid taxes or an unsatisfied mortgage) that constitutes or represents a burden or charge upon the property.

Equity - The difference between the sale price of a property and the mortgage on the property.

Escrow Account - A third party account used to retain funds including the property owner’s real estate taxes, buyer’s earnest money or hazard insurance premiums.

Examination - The study of the instruments and muniments incident to a chain of title to determine their effect and condition in order to reach a conclusion as to the status of the title.

Exception - A provision in a title insurance binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance.

FHA Insured Mortgage - The Federal Housing Administration makes available through banks and other lenders, insured mortgages with low down payment requirements.

Fixed-Rate Mortgage - A mortgage that has a set interest rate and is basically unaffected by interest rate changes.

Forgery - The fraudulent signing of another's name to an instrument such as a deed, mortgage or check.

Free and Clear Title - Title to a property which is free from any mortgage, lien, or other encumbrance.

Gift Letter - A letter to HUD from the donor (giver) stating that a gift of money has been made to the buyer in order to purchase specific property. The relationship of the donor and donee is stated, as well as the amount of the gift.

Graduated Payment Mortgage - This mortgage offers low initial monthly payments which increase at a pre-determined rate, then cap at a final level for the duration of the mortgage.

Grant - To bestow or confer, with or without compensation, a gift such as land or money by one having control or authority over the gift.

Hold Harmless Agreement - An agreement by which one party agrees to repay another for any loss or damage the latter may suffer.

Home Inspection - A formal survey of a home’s structure, mechanical systems and overall condition, generally performed by a licensed professional inspector.

Homeowner’s Insurance - Real estate insurance (also known as "Hazard Insurance") protecting against loss caused by fire, some natural causes, vandalism, etc., depending on the terms of the policy. Also includes coverage such as personal liability and theft away from home.

Homestead - The dwelling house and adjoining land which is considered your primary residence. However, the homestead is limited in size to either 1/2 of a contiguous acre if within a municipality, or up to 160 contiguous acres if outside a municipality. You can only have one homestead in Florida and the exemption, should you qualify, is $25,000.

HUD (Department of Housing and Urban Development) - The federal department responsible for the major housing programs in the United States.

Interest - The pre-determined charge or fee paid to a lender by the borrower for the use of monies loaned.

Intestate - Without leaving a will, or leaving an invalid will so that the property of the estate passes by the laws of succession rather than by direction of the deceased.

Irrevocable - That which cannot be revoked or recalled, such as certain trusts, contracts, and other legal relationships.

Joint Tenancy with Right of Survivorship - An undivided interest in property, taken by two or more joint tenants. The interests must be equal, occurring under the same conveyance, and beginning at the same time. Upon the death of a joint tenant, the interest passes to the surviving joint tenants, rather than to the heirs of the deceased.

Judgment - The determination of a court regarding the rights of parties in an action. A judgment of debt on a property owner can create a lien on all of that owner's land within a certain jurisdiction.

Junior Mortgage - A mortgage lower in lien priority than another.

Leasehold - The right to possession and use of land for a fixed period of time. The lease is the agreement that creates the right.

Lease-Purchase Agreement - An agreement between owner and tenant specifying a portion of monthly rent, during a specified period, to be credited toward purchase of property.

Legal Description - A method of geographically identifying a parcel of land, which is acceptable in a court of law.

Line of Credit - An amount of money a borrower may obtain from a bank without a special credit check. The money is generally for business purposes and the amount would not include the borrower's own home loan and other personal secured loans.

Loan Policy - Also called "mortgagee policy." A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalidity or unenforceability of a lien, or loss of priority of the mortgage or deed of trust.

Market Price - The actual price at which a property is sold.

Market Value - The price that is established by existing economic conditions, property location and market style and size preferences.

Metes and Bounds - A land description in which boundaries are described by courses, directions, distances and monuments.

Mortgage - A legal claim received by the lender on a property as security for the loan made to a buyer to facilitate the purchase.

Mortgage Interest - The amount the borrower pays the lender to compensate the lender for the use of money to purchase the borrower’s home. This is tax deductible interest.

Mortgagee Policy - See Loan Policy.

Note - Also called a "promissory note." A written promise to pay a sum of money, usually at a specified interest rate, at a stated time to a named payee.

Negative Amortization - Most likely to occur with ARMs when monthly payments are not sufficient to cover interest cost. Additional interest is added to principal balance and the borrower may end up owing more than at the initiation of the loan.

Origination Fee - Similar to a point, this fee is a supplemental fee paid by buyers to lenders.

Owner's Policy - A policy of title insurance insuring an owner of real estate against loss occasioned by defects in, liens against, or unmarketability of the owner's title.

Payment Cap - A limit on the amount monthly payments on an adjustable rate mortgage can increase or decrease at each adjustment period.

Planned (Unit) Development - A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels. The lots are generally small, being the exact size of the improvements, or slightly larger.

Plat - Also called "plat map." A map dividing a parcel of land into lots, as in a subdivision. A plat book contains the plat maps for a given area.

Point - A single percent of the loan principal, often charged by the lender in addition to various fees and interest.

Power of Attorney - An authority by which one person (principal) enables another (attorney-in-fact) to act for him. (1) General power - Authorizes sale, mortgaging, etc. of all property of the principal. Invalid in some jurisdictions. (2) Special power - Specifies property, buyers, price and terms. How specific it must be varies in each state.

Prepayment Penalty - A fee included in the mortgage agreement requiring borrower to pay in the event the loan is paid before the due date.

Prequalification - An informal estimate of the “financing potential” of a prospective borrower.

Principal - The amount of money borrowed against which interest and possibly fees will be charged. (A second meaning: one of the parties to a contract.)

Private Mortgage Insurance (PMI) - Insurance against a loss by a lender in the event of default by a borrower (mortgagor). The insurance is similar to insurance by a governmental agency such as FHA, except that it is issued by a private insurance company. The premium is paid by the borrower and is included in the mortgage payment.

Prorate - Proportionate division of expense based on days or time occupied or used by the seller and/or buyer.

Qualify - Ability of a borrower to satisfy a lender’s mortgage approval requirements.

Quit Claim Deed - A deed that does not imply that the grantor holds title, but that surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.

Recording - The noting in a public office of the details of a legal document - such as a deed or mortgage - affecting the title to real estate. When such an instrument is properly recorded, it is considered to be a matter of public record. Legally, that means that all subsequent purchasers are deemed to have constructive knowledge of that information.

Refinancing - The process of applying for a new mortgage to gain better terms or use of equity.

Reissue Rate - A charge for a title insurance policy if a previous policy on the same property was issued within a specified period. The reissue rate is less than the original charge.

RESPA Statement - The Real Estate Settlement Procedures Act requires a precise listing of all closing costs for both sellers and buyers.

Restrictions - Limitations on the use of property imposed or created by deeds or other documents in the chain of title. A restriction, for example, may prohibit the placement of a trailer or the construction of a commercial structure on the property.

Riparian Rights - The rights of owners of lands bordering watercourses which relate to the water and its use.

Satisfaction - Discharge of an obligation by payment of the amount due, as on a mortgage, trust deed, or contract; or payment of a debt awarded, such as satisfaction of a judgment. Also the recorded instrument stating said payment has been made.

Search - A careful exploration and perusal of the public records in an effort to find all recorded instruments relating to a particular chain of title.

Second Mortgage - A mortgage ranking in priority immediately below a first mortgage.

Settlement - This term relates to all legal and financial transactions required to finalize the contract between buyer and seller, at the conclusion of which closing takes place.

Simultaneous Issue - A simultaneous issuance by a title insurance company of policies insuring both an owner and a lender. The lender's policy is issued at a reduced rate.

Subordination - The act or process by which a person's rights are ranked below the rights of others. For example, a second mortgagee's rights are subordinate to those of the first mortgagee.

Title - A legal document that defines the property, right of ownership and possession.

Title Defect - (1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.

Title Insurance - An insurance policy that protects the buyer against errors, omissions or any defects in the title.

VA Mortgage - The Department of Veterans Affairs has made guaranteed mortgages available through banks and other lending institutions to active military personnel, veterans, or spouses of veterans who died of service-related injuries.

Variable Interest Rate - Also called "flexible interest rate." An interest rate that fluctuates as the prevailing rate moves up or down. In mortgages, there are usually maximums as to the frequency and amount of fluctuation.

Walk-Through Inspection - The final inspection by the buyer, usually in the company of the buyer’s real estate sales agent, to ensure that all conditions noted in the offer-to-purchase, and all seller-related contingencies have been met. This inspection is most often completed immediately prior to the official act of closing, after the seller has vacated the premises.

Warranty - Protection provided to the purchaser regarding the condition of appliances and pictures. Often, new homes have more extensive warranties also covering the overall structure.

Zoning - Laws passed by local governments regulating the size, type, structure, nature and use of land or buildings.


Rate and Costs

Seller Net Sheet

These other factors could affect your fees and costs:
  • Loan amount exceeding purchase price of property
  • Lender requirements regarding additional endorsements
  • Courier charges and other miscellaneous fees
This form may be used to calculate an estimate of seller's net proceeds after deducting the closing costs involved in selling a home.
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