Even if they do not think much of it, most residents of Palm Beach County have a title insurance policy.
In residential transactions, mortgage companies will insist that the borrower have title insurance. Even without lenders, title insurance is commonplace in both commercial and residential real estate sales.
Title insurance can be complicated, especially in larger commercial real estate transactions.
Basically, a title insurance company will first arrange for a thorough title search and investigation into the history of a property that will be sold.
If they discover a title defect, they will exclude it from their policy. Ultimately, the title insurance company will issue a policy which agrees to pay, up to a certain amount, for financial losses related to a title defect that the company does not exclude.
The company also has the option to take legal steps to fix a title defect, and it has an obligation to defend the policyholder against lawsuits involving title to the property.
Like any other insurance, title insurance coverage is subject to certain terms and conditions. Title insurance policies are detailed legal contracts, and both the insurance carrier and the policyholder have certain rights and responsibilities.
But the benefit to title insurance is that, in a real estate dispute, the policy may allow a property owner to avoid having to pay legal expenses to defend the right to their property. They also have a financial remedy if they run in to a title problem which cannot be fixed.
Filing a title insurance claim
Title defects are surprisingly common.
Although it might be relatively rare for someone to literally buy another person’s real estate unawares, liens, easements, recording issues and the like can prove costly. A developer facing these costs may need to file a title insurance claim to protect their financial interests.
Filing and then prosecuting a title claim can be challenging. Title insurance companies do not expect to pay out on claims, which is why premium is only a fraction of the value of the real estate being insured. A developer that has run in to a title issue should prepare to advocate for their right to coverage.