Yesterday, I had a discussion with one of my friends about whether or not he needs to buy title insurance for a vacant lot he found here in Jacksonville, Florida. If you’re also buying land in Florida, I strongly advise you to read this post.
Title Insurance when Purchasing Land: Do You Really Need It?
Title insurance may seem to be an unnecessary expense at first. That’s because many people mistakenly believe they don’t need insurance for a title that’s clear of defects. At the risk of starting out a contradictory debate, I feel it imperative to express my profound disagreement. And that’s not because I like to contradict what others are saying or because I specialize in the field of title insurance BUT because this type of insurance is incredibly useful when two people claim they’re in lawful possession of a piece of land.
Though a title search is usually performed during the closing process, there are situations in which even the most diligent search may fail to reveal certain defects. Besides “common” problems like unpaid taxes, undisclosed heirs, incorrect marital status and clerical errors, there are a series of “hazards” that may remain hidden and jeopardize your right to ownership later on (e.g. previously obtained and unrecorded or disputed rights to the air above and/or minerals under the land; non-compliance with development laws; unsatisfied conditions of development approvals; etc.).
But doesn’t the property title or deed provide proof of ownership? To give you a comprehensive answer, let’s first focus on the legal concepts behind these two terms. While the title proves that you’re the legal owner of a property and have the right to use and potentially modify it as desired and legally allowed, the deed is a written document that only attests the transfer of the title from one person to another.
It’s also essential to know that the property title or deed cannot protect you against losses resulting from errors or omissions during title investigation. Though these two documents confirm that you’re the legal owner of the land, only a title policy can provide coverage against partial or total loss arising out of undiscovered defects, encumbrances and liens in the title.
If a claim is made against your insured title and the defect is covered by the policy, the insurance company will defend your title in court, if necessary, and cover lawyer and court expenses along with any settlement amount required to clear the title. Without insurance, the other person may get the land back and you’ll lose your entire investment.
A few more points worth mentioning are: in Florida, title insurance is protected by laws and court precedents; if a claim covered under the policy is filed against your property title, you only need to demonstrate that you’ve suffered actual loss without having to prove fault or negligence; title insurance involves a one-time fee paid at the closing and remains in effect as long as you or your heirs own the property.
To find out more about how title insurance can help you protect your investment or to request a free, no-obligation title quote, contact us at Guardian Title & Trust, Inc.. As a licensed and ALTA certified title insurance company, our professionals have the necessary knowledge and experience to offer you complete, worry-free coverage.