Order title insurance commitment

1. Determine your home's value in today's marketplace
2. Find out what is currently available for sale in your area or neighborhood
3. Estimate the proceeds from selling your home
4. Determine what needs to be repaired or upgraded before you sell
5. Make necessary repairs – find qualified contractors
6. What's the best way to sell your home?
7. Decide whether and how to use an agent or sell your home yourself
8. Determine your sales price
9. Sign a listing agreement with a real estate agent
10. Create a proactive home marketing plan
11. How to handle showing your house to potential buyers
12. Get showing feedback
13. Provide property disclosures
14. Continue home marketing efforts & price adjustments
15. How to negotiate home selling price upon receiving an offer
16. Sign all real estate contract documents
17. Order title insurance commitment
18. The mortgage application process: track the buyer's progress
19. The home inspection process
20. The title process & closing the sale of your home

Understanding Restrictions and Rights to Use of a Property

When you sell your home, you sell more than the land and the structures and improvements upon the land. In real estate, there is a "bundle of rights" that goes with a given property. That "bundle of legal rights" includes the right to possession (ownership), control, enjoyment, exclusion, and disposition of the property within the legal parameters of local, state, and federal laws.

In some cases, there are "deed restrictions" on how a property can be used, mineral and subsurface rights can be severed from the property and sold to oil & gas companies who may have the right to drill on the property, and easements granting others (e.g. utility companies) the right to access your property may exist. A title insurance policy should identify such "property" and "property rights constraints," and allow both sellers and buyers to know what liens, encumbrances, and other limitations exist for a given property.

 

Unlike with automobiles, the "title" in "title insurance" does not refer to ownership. That is, it does not denote ownership. Deeds denote property ownership.

 

What is title insurance?

Title insurance is the mechanism by which a seller (you) demonstrate that you have "free and marketable title," (subject to existing mortgages and liens), to the property and identify what � if any � limitations there are on the legal "bundle of rights" that will be conveyed upon the sale of the property to a new owner (buyer). There are risks associated with real estate transactions that may not be identified through a complete and thorough search of public records by a qualified title examiner. Title insurance protects both against human error and hidden hazards. These hazards include:

• Mistakes in the recording of legal documents
• Forged (fraudulent) deeds, releases, or wills
• Undisclosed or missing heirs with potential legal claims to the property
• Deeds granted by "incompetent parties"
• Deeds granted by those not of "legal age"
• Inaccurate legal descriptions
• Intentional acts of fraud
• And others

What many sellers do not understand is that in most states, they are required to buy the title insurance policy, and that the title policy protects the buyer from defects in title that may be identified after the sale of property. The title policy is actually called an "owner's title policy" and benefits the buyer while the seller normally pays the premium for that policy. As such, the seller (or the seller's real estate agent) usually chooses the title insurance company, not the buyer, although either seller or buyer can decide.

 

Title policies

Sellers can save money on these title policies by requesting what is called a "reissue rate" from the title company. In most states, title companies will reduce the premium charged for a title policy if a title policy was issued for that property within the last five years. The reduction is usually granted due to the fact that the title company � in theory � need only research the "chain of title" going back five years or less, depending upon the prior title company's research and the prior files for the policy itself, and therefore reduce its cost to do the "due diligence" in providing a new title policy. Sellers should ask their title insurance provider what the law is in their respective state, and what the title company's policy is regarding the granting of "reissue rates."

 

Title exceptions

As with all forms of insurance, there is typically a "standard" policy that provides basic coverage, and a series of "exclusions" to coverage that can be removed via "special endorsements" to the policy that can be provided for an additional premium. When a title commitment is received, it should be scrutinized for any "exceptions" to title that are identified by the title insurance provider. These exceptions should be removed or "insured over" so that the highest form of protection is provided to the new owner (buyer). Consult with your local title provider upon the receipt of the "title commitment" to determine the nature of the risk associated with a given exclusion and the additional cost of coverage.

 

Finally, it should be noted that title insurance premium rates are regulated by the Insurance Commission of a given state, which reviews the title provider's loss history, levels of reserves for losses, and other key ratios in a regulatory capacity. This should result in title insurance premium quotes that are all in the same pricing "ballpark", relatively speaking. However, title companies may offer different response times, or may have different levels of automation (e.g. how they handle electronic documents). Next Step: The mortgage application process: track the buyer's progress