April 17, 2018

Title Insurance Overview

If you ever purchased a home, you probably purchased title insurance; a lender’s policy if you applied for a loan which protects the lender and a simultaneous owner’s policy which protects the owner of the property.  Did you purchase this just because it was a part of the contract to purchase not really knowing what a title insurance policy does for you?  Here are a few things you may not know about the process involved when ordering title insurance:

1.  A title order begins with an in-depth search to review public records pertaining to the property being insured.  A search is also done for judgments, liens, etc. on the names of the parties involved in the transaction.

2.  Searches can be complex and conducted by going to the courthouse of the county the property is located within or sometimes large databases are used for searching purposes. 

3.  Title searches can uncover possible past defects in the chain of title.  The purpose of the Owner’s Policy is to protect one from covered title defects existing prior to the issuance of the new Owner’s Policy.  Possible title defects include liens, judgments, liens for unpaid homeowner association fees or municipal assessments, unpaid taxes, outstanding mortgages, forgery of prior documents, probate issues upon the death of a property owner without a will, documents signed under duress or deeds signed by minors, deeds signed by one who has an expired power of attorney, etc. just to name of few.

4.   Newly constructed properties require a thorough search prior to the closing of a construction/permanent financing loan as there could be sub-contractor or mechanics liens filed against the property if materials and services have not been paid by the builder or developer.

5.  Once the search is completed, the agent reviews all documents to ensure nothing has occurred in the past chain of title to prevent the insurer from issuing a title commitment.  This commitment has certain requirements shown in Schedule A which must be adhered to prior to or at closing in order for a lender’s and owner’s title policy to be issued.  Once all requirements are met, title premium(s) paid and proof provided to the insurer, final policies are issued as applicable.

5.  A Lender’s Policy is issued when a lender has a security interest in the property like a first mortgage loan, home equity line of credit loan, second mortgage loan, etc.  This type of policy does not protect the owner of the property.

 

6. Title insurance rates are set by the State of Alabama Insurance Department.  A title search fee is charged for the search and retrieval of documents for the agent to review in order to issue title commitment.

7.  Title premium(s) are a one time charge and good for as long as one owns the property.  This is unlike a homeowner’s insurance policy which has to be renewed and paid annually.

SETTLEMENT PROCESS OVERVIEW

The settlement agent will order all closing exhibits; i.e., seller’s mortgage payoff, prepare all closing documents and affidavits necessary, plus follow the requirements specified in Schedule A of the Title Commitment. Warranty Deeds will be prepared by local attorneys.

Closing fees will vary based on the type of closing; i.e., cash, purchase money first mortgage, home equity line of credit, etc.  Call for pricing.

Mobile closing services are offered.  This means the closing can occur at a designated location for the convenience of all.

If ALLY Title Services, LLC is handling the title search to include issuing the commitment and conducting settlement services, the settlement fee will be reduced.  Call for pricing.

ALLY Title Services, LLC will make all necessary disbursements as part of the closing process; i.e., wire seller’s mortgage payoffs, pay any necessary home owner’s insurance annual premium to the insurer and be responsible for making any other payments outlined on the Closing Disclosure (CD)/ ALTA Settlement Statement or HUD-1 Settlement Statement.