Real Estate Transactions
A lot of time and effort goes into investing in real property, whether commercial or residential. No matter if it is your first house, or the newest commercial rental that your business is looking to secure, preparing for a real estate transaction is always a large task. Our goal is to help guide you through the process, from the initial negotiations and contracts, all the way up to taking possession of a property. Most real estate transactions require a substantial amount of paper work, and it is important that you know all the details before you enter into an agreement. We want you to know all your rights and responsibilities. We will answer any questions that you have, in order to make sure that you are fully prepared for any type of transaction.
When closing on a piece of property, there are many roles that must be filled. The Richards Law Group, PLLC offers closing services and is licensed to provide title insurance anywhere in the state of Florida. The following are some of the basics involved in a real estate closing:
Once a buyer and seller agree on a price for the purchase of a piece of real estate, typically the real estate agents compose the contract for sale and purchase (which in most cases in Florida is a standard Florida Realtors/Florida Bar contract). From that point on, the closing agent takes over and begins the preparation for the closing, which gives the buyer title to the property and the seller the money that is agreed upon for the purchase.
The Closing Agent
In a standard real estate transaction, before the actual closing can take place, there is much research and preparation that must be done. These tasks are primarily done by the closing agent, and they include collecting and coordinating many pieces of information from many different sources including the real estate professionals, lenders, surveyor, insurance companies, homeowner’s associations, ect. Once all the information is gathered and processed, the closing documents are prepared and all monies are received, the official closing can take place. After all closing documents are signed and checks are cut for all parties, the official documents must be given to the proper parties, and filed with the County Clerk’s office to put the world on notice of the real estate transaction.
The Title Search
The first thing that the closing agent starts with is the title search. The easiest way to accurately describe what title to a property is to use the example of a bundle of sticks, with each stick representing some type of interest in the property. In that bundle, one stick can represent a right to the home, one can represent a right for the power company to keep their power lines under the ground, and one can allow the neighbor to use a portion of the driveway to access their property. By conducting a title search we are able to determine who owns each stick in that bundle, thus letting the purchaser know who has rights to the property they are planning on buying. So a title search determines that the person who is selling the property legitimately has the right to sell it, and that the buyer is getting all the rights to the property that they are paying for. The title search helps determine the insurability of the title to the property and leads to the issuance of a title policy, which insures the existence or non-existence of rights to the property
Title insurance is a protection against loss resulting from defects in the title to the property. Defects take many forms including everything from fraudulent deeds to long lost heirs asserting a claim on a property. When a title policy is issued, the title company is guaranteeing there are no faults in the title, and that good title to the property is changing hands or else they will cover the damages up to the title policy limits. Title insurance differs from other forms of insurance in that a title policy insures against issues concerning the past, not the future. Typically the title insurance premium is paid only on time, at closing. The policy remains in effect for as long as the insured maintains title to the property.
There are two types of title insurance policies, Owners Policies (a policy that protects the purchaser of the home) and a Lender’s Policies (a policy that protects the person or business lending the money to the purchaser). Most people obtain a loan to purchase their home, and the lender will require that you purchase Lender’s Title Insurance. This type of policy protects the lender’s investment, and it does not provide the buyer with any protection.
An Owner’s Policy protects the purchaser if a title issue arises after you buy your home. Even with a title search revealing nothing wrong with the title to the property, there may be some hidden issues. A satisfaction of a previous mortgage may have been forged, or an heir was not properly identified during a probate proceeding. Just as automobile insurance protects you when you get into an accident, title insurance protects you when title issues arise.
How much does title insurance cost?
The amount of the title insurance premium is directly related to the purchase price of the property. An Owner’s Policy in Florida costs $5.75 per $1,000 of the purchase price up to $100,000. Over that mark, the rate is $5.00 per $1,000, with additional rate adjustments as the liability amount increases.
So for example, if you purchase a home for $150,000 home, the title premium would be $825.00. That is calculated by taking the first $100,000 value of the house and multiplying it by the $5.75 rate ($100,000 x $5.75 =) $575. The additional $50,000 in value of the home is then multiplied by the $500 ()$50,000 x $5.00 =) $250. You then add the two amounts together to get the total amount of the premium ($575 + $250 = $825).
There are other factors that come into play, such as lower rates due to previous policies in place, and cash transactions.
What is a reissue premium?
A lower rate may be available to you when you are obtaining your title policy if you qualify for a reissuance policy. In order to obtain this reduced rate, you must have either:
- A previous Owner’s Title Insurance policy that was issued to you, the seller or the mortgagor, within the past three years.
- You are refinancing your mortgage, and in such as case, you will receive a reissue premium based on the amount of the original owner’s policy issued to you.
- The existing policy was issued on unimproved real property (except for roads, bridges, drainage facilities and utilities) provided the current owner’s title has been insured prior to this application for a new policy.