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Do I need Title Insurance?

A title insurance policy covers or protects the owner of the policy against claims involving ownership of the property, liens against the property and marketability of the property. There are two types of policies: lender's, or mortgagee, and owner's. All lenders require title insurance for the amount of the loan to protect them against the above claims. In Georgia, unlike some states, a seller is not required to provide an owner's title policy to the purchaser.

A lender's title policy is written in the lender's name and protects only the lender. If there is a successful claim against the title, even up to a total failure of title, the lender will be fully reimbursed by the title company. The buyer is still liable for the payment of the loan, and of course buyer's equity is not insured. An owner's policy of title insurance offers complete protection for the buyer against claim or loss, including attorney's fees and court costs.

As with any insurance policy, it is very important to understand the exclusions, or what the policy does not cover. An owner's policy insures against claim or loss arising from something that happened or did not happen prior to the recording of the deed that is insured (for an owner's title policy, the recording of the warranty deed into the buyer). An owner's policy does not cover anything existing against the buyer when he or she takes title, such as federal tax liens or other judgments, nor does it protect against anything that may attach to the property through the buyer after the buyer takes title. The policy des not protect against the reassessment of current or past property taxes. If the buyer did not have a survey prepared for the purchase or the property, the owner's policy will specifically exclude coverage for any condition that such a survey would have disclosed. An owner's policy also will not protect against non-title matters such as zoning or local government regulations.

Title insurance is written by the closing attorney as an agent for the title insurance company. Title insurance premium rates, although not regulated by the state, tend to be uniform because of market competition. The best time to purchase owner's title insurance is at the closing because the title, tax and lien search has already been done. GRECAA recommends that all buyers purchase both owner's title insurance and a survey in connection with the purchase of a house.

What is a Preliminary Title Report?

The Preliminary Report is an offer to issue a policy of title insurance covering a particular estate or interest in land subject to stated exceptions.

Since these exceptions may point to potential problems with your intended purchase, it is important for all parties to review the report once it is received.

A Preliminary Report provides a list of the matters which will be shown as exceptions to coverage in a designated policy or policies of title insurance, if issued currently, covering a particular estate or interest in land. It is designed to provide an interim, or "preliminary" response to an application for title insurance and is intended to facilitate the issuance of the designated policy or policies. It is normally prepared after application (order) for such policy(ies) of title insurance on behalf of the principals to a real property transaction, for the purpose of facilitating requirements relative to closing and policy issuance in form and content approved by those parties.

If a title policy is not contemplated, a Preliminary Report should not be ordered. Instead, consideration should be given to requesting a Certificate of Title Report or other similar title product.

The Preliminary Report states on its face that it is made solely to facilitate the subsequent issuance of a title insurance policy and that the insurer assumes no liability for errors in the report. Acccordingly, any claim arising from a defect in title must be made under the title policy and not the Preliminary Report.

After a title order has been placed, matters relative to the title policy coverage on the subject property are assembled in a title search package and examined by skilled technicians. This is when the Preliminary Report is prepared and sent to the customer. The report contains relevant information so that the parties to the transaction will become aware of matters which will not be insured against by the title company. This report is issued before the title policy, hence the name Preliminary Report.

The matters shown in the report are as follows:

  • The estate of interest covered.
  • The owner of the estate or interest.
  • The parcel of land involved.
  • The exceptions, liens, encumbrances and other risks which will not be insured against if a title policy is issued.
  • Other requirements and provisions which are removed if and when a title policy is issued.

What type of report do I need to order?

CHECKDOWN. A checkdown is ordered after closing to assure that all requirements of closing have been satisfied of record. This is primarily used to assure that all issues have been complied with so that an Agent may issue title insurance. In this type of report we will only show new items such as new Warranty Deeds, Quit Claim Deeds, or Security Deeds that have been recorded since the initial search.

RESIDENTIAL CERTIFICATE OF TITLE. This is a basic Attorney’s Certificate of Title and will show you only the current status of the property. It will not include any requirements for clearing title; however, we will let you know any problems that would need to be complied with. You may choose this type of search if you are not issuing title insurance or if you have run a full search on the property already and just need a few years searched.

COMMERCIAL CERTIFICATE OF TITLE. This is when you request that a commercial search be performed but do not need a full title search or if you prefer that your searches are in Certificate of Title.

COMMITMENT. This report is prepared in Commitment Format. Unless requested, it is only in the ALTA format that many lenders will require before closing and not a commitment that Augusta Title, Inc. is expecting to prepare the Title Insurance Policy. This report will show you all underwriting requirements and exceptions for closing. This report is prepared in this format to save you the time of retyping our information into a Commitment to comply with lender requirements. All the issuing agent needs to do is sign Schedule A and comply with any other requirements that your Title Insurance Company requires with regard to issuance of a commitment.

UPDATE. An update will be run in the same format as originally ordered and only the dates and any new information found will be added. We will only do an update if there has not been a closing since the last time the property was ran by us. If there has been a closing, or if it has been a year since the property was last searched, then we will open a new file for the title search.

LIEN/INVOICE FORM. This form will be used if you only want a lien and docket search run.

INVOICE. If you just order copies of deeds with no certifications then you will only receive an invoice.

Leverette Law Firm can assist you with the following services:

  • Insured Closing Letter Service
  • Residential and Commercial Real estate Closing Services
  • Title Examination
  • Title Commitment or Binder
  • Owner’s Title Policies
  • Lender’s Title Policy
  • 1031 Exchange Closings
  • Escrow of Funds
  • Title Updates for Construction Loan Draws
  • Construction Loan Draw Endorsements
  • Coordination with Developer, Realtor, Mortgage, and all parties for closing
 
 
 

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