What is title insurance?
Title insurance protects your homeownership rights and defends you from loss, as a result of claims or defects in your title. It protects you from any past events that could affect your enjoyment or marketability as a homeowner such as liens, easements, fraud, forgery, improper documents, encroachments, others claiming ownership, and anything else included within the policy.
Are Title premiums paid annually like other types of insurance?
No. A one-time payment at closing is the only payment required for the life of the policy.
Does it pay to shop around for title insurance?
Title Insurance premiums are regulated by rating bureaus in each state, so the only decision is to choose a Standard Policy or an Enhanced Policy.
Why choose an Enhanced Policy?
Required by most attorneys, the Enhanced Policy offers 28 additional benefits, including a free escalation in policy value and many important coverages continuing into the future. Critical fraud and forgery coverage are among these.
Who pays for title insurance?
It depends on your state. Sometimes the buyer, sometimes the Seller and in some states, a combination of both parties.
Does the amount of coverage increase as the value of my property increases?
With an Enhanced Policy, the value of total coverage automatically increases up to 150% of the original owner’s policy amount over 5 years.
Where can I have my closing?
It is your choice! For refinances, it can be at your home or one of our many closing locations. For a purchase, it can be at the office of your realtor, your attorney or any one of our convenient closing locations.
Can you prepare a deed for me?
Yes. We have an in-house Legal Department that can do so for a fee. Please email us at [email protected].
What is the Foreign Investment in Real Property Tax Act (FIRPTA) and what does it have to do with title insurance?
The Foreign Investment in Real Property Tax Act (FIRPTA) is a provision of the Internal Revenue Code [Section 1445] which requires the buyer of real estate to withhold 10% of the ‘amount realized’ from the sale of the real property where the seller is a ‘foreign person.’
The Act places the responsibility to withhold the 10% on the buyer of real property or his agent. If he/she fails to withhold the proper amount, he/she may be held liable for the payment of the tax plus penalties and interest.
There are several exceptions to the 10% withholding requirement. The following two are most relevant to residential real estate closings:
- An individual buyer is acquiring real property for use as a residence and the ‘amount realized’ is $300,000 or less. The seller’s use of the property is not relevant. This exemption does not apply if the actual transferee (usually the grantee in the deed) is not an individual, even if the property is acquired for use by an individual. As proof of the exclusion from FIRPTA withholding, a buyer’s exemption affidavit setting forth the sales price and that the property is being acquired for residential use is necessary.
- The seller is not a ‘foreign person.’ Withholding will be exempted if the transferor furnishes a Non-Foreign Status Affidavit (NFSA) which sets forth the seller’s taxpayer identification number (i.e. social security number or identification number for business entity) and contains a statement that the transferor is not a ‘foreign person.’ The NFSA can be executed by a US citizen, a US green card holder, a proper corporate officer of a foreign corporation, a general partner of a foreign partnership or fiduciary of a foreign trust or estate. A transferee is not permitted to rely upon a NFSA if he or she has actual knowledge that it is false. He or she must then comply with FIRPTA withholding, unless another exemption applies.
The forms and instructions for FIRPTA withholding may be accessed on the Internal Revenue Service’s website – www.irs.gov – by choosing form number 8288.
What is the difference between a lender’s title insurance policy and owner’s title insurance policy?
A lender’s policy only covers your lender and its investment in your property; it does not protect you, the owner. Only an owner’s policy protects the owner from claims to or defects on the property.