Title Insurance FAQ (Frequently Asked Questions)
 

What is meant by "Title" ?
"Title" equates to legal ownership of property. It legitimates your right to "peaceful enjoyment" of the property you own, within restrictions or limitations of use imposed by government authorities. A "Clear Title" means ownership is without blemish. A "Cloud on Title" indicates that some inconsistency exists which may blemish ownership if not corrected. A "Defect in Title" is indicative of an encumbrance or a more severe problem needing remedy. Finally, a "Failure of Title" demonstrates failure to convey ownership from one owner to the next.
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How does Title Pass from one Owner to Another ?
Legal title passes from one owner to another in one of many ways through a WILL, Inheritance, Grant, Operation Of Law, Court Decree, Descent & Distribution etc. In most cases, however, it is conveyed through a written instrument called the DEED. The person conveying ownership is called a "Grantor" while the person to whom ownership is conveyed is called the "Grantee". The Deed must be delivered by the grantor and accepted by the grantee. A Deed does not have to be dated, notarized, recorded or have any consideration to be valid. However, it must be notarized before it can be recorded in court.
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What is meant by "Chain of Title" ?
Chain of title refers to the chain of ownership created by repeated buying and selling of the same property. Each time a property is sold and purchased, the new ownership is recorded in county courts for public records. Over time, a chain of ownership results from such repeated change of hands.
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What is Title Insurance ?
Title insurance is an insurance policy issued by an Insurance Underwriter, guaranteeing a buyer's ownership and peaceful enjoyment against claims, liens or judgments associated with a property after the purchase is completed. Such insurance protects against losses arising from events occurring prior to the date of the policy. Unlike Real Property or Casualty Insurance where coverage starts on the day a policy is issued, title insurance being Indemnity Insurance causes coverage to stop on the day the policy is issued. Its coverage extends backward in time and guarantees that events prior to your ownership do not result in losses to you.
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How long does Title Insurance Protect the Property Owner ?
Title Insurance provides protection indefinitely, for as long as the current ownership lasts. When current owners sell, however, the same cycle starts all over again, and the new owner's policy ends on the date of issue, covering them from losses arising during previous ownership.
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What types of Title Insurance Policies are available ?
In general, there are two different types of Title Insurance policies available. The Owner's Title Insurance Policy which offers protection only to the owner against defects in their title to real estate. The Lender's Title Insurance Policy is meant to insure and protect only the lenders' loans against defects and losses until the mortgage is paid off. Consequently, a lender's policy does not provide coverage to the owner in the absence of the owner's policy. A new owner's policy need not be necessary when refinancing an existing property, however the lender will require the purchase of a new lender policy.
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What is the function of a Title Insurance Company ?
Legal statutes provide that buying and selling of real estate must involve an independent third party to facilitate the performance of escrow, closing and settlement, and the issue of title policies. A full service title company performs the search on the property, conducts the requisite due diligence to review the Chain Of Title, identify any inconsistencies, liens, judgments, etc., issue the Commitment To Insure, manage the funding through escrow accounting, coordinate all activities between the buyer, seller, realtors, mortgage brokers, lenders etc., conduct the closing, disburse funds, issue the Title Insurance Policy to both the buyer and lender, and finally get all required documents recorded to establish your ownership.
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What are the costs involved in Title Insurance ?
Title Insurance costs may be broken down to two basic types. Fixed Cost and Variable Cost.

Fixed Costs (the largest component) typically represent the Title Insurance Premium (including any applicable Endorsements) paid one time based on the purchase/sale price of the property. Additionally, they also include factors such as Document Recording Fees, Stamp Fees, Intangible Taxes, City Assessment etc. These costs are formulated and regulated by the government and remain constant across all title insurance companies.

Variable Costs (the smaller component) typically represent service charges including Search & Examination Fees, Processing & Settlement Fees, Mail/Wiring/Document Storage Handling Fees, Notary Charges etc. It is in this area where title agencies differentiate themselves. Additionally, they may also include factors such as applicable Survey Charges, Inspection and Appraisal Charges, Insurance Charges, Loan Cost etc. (all/most of these being usually performed independently and charged by outside service providers).

On some occasions, one party will bear responsibility of total cost. Generally, most costs are spread between the buyer and seller, although negotiated agreements among them dictate eventually who pays for what. Please fill and submit our Online Request For Quotation Form for detailed costs associated with your specific situation, and our staff will respond to your request within 24 Hours.
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How do I select the right Title Insurance Company for my transaction ?
Cost differentiation is one of the many components consumers use in such determination. The cheapest service, however, is not always the best. In addition, there are many intangible attributes more difficult to measure. They include value additions on account of the length of time a title company has been in business, the expertise and experience of the facilitators, the professionalism and courtesy with which a service is provided, the accuracy of the work performed, the office environment, commitment to management by process control, and the word of mouth that ultimately define quality. These are realized through personal experience.

At La Playa Title we believe that quality is defined by customer requirements. The satisfaction of those requirements is the customer's right and our job. Despite the heavy regulation within our industry, we have further submitted our standards to the test through the Better Business Bureau. We have a stellar record with our accuracy, enjoy enormous repeat business, provide a beautiful office environment and a staff second to none. The final word of course will be yours.
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Who decides on the selection of a Title Agent ?
We recognize that whether you are a buyer or seller, you have the right to choose your title company. Where most real estate buyers and sellers once let their agents select the title insurance company for them, today's customers are highly educated and experienced in measuring the power of their investment. Some would have you believe that generally the right to choose a title company rests with the party paying for such service, or the lender, mortgage broker or real estate agents. In reality however, that right was, is, and will always remain a negotiated one. Hence our belief at La Playa Title, that since the buyer always pays for every one, the property, the realtors, the lenders, the title insurance company, the insurance underwriter et al., Buyers have as much right to exercise their choice.
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What is Homestead ?
The Florida Constitution provides that any Real property, Condominium, Mobile Home etc. which serves as a permanent residence of a Florida Citizen is entitled to homestead benefits and exemptions. In order to benefit from this provision, the owner is required to file and record a "Notice of Homestead" in the official records of local county circuit court. Homestead property is protected from (1) Forced Sale by Creditors, and entitled to (2) Property Tax Exemptions permitted under the law. Back to top

What is a 1031-Exchange ?
Internal Revenue Tax Code Section 1031 allows taxpayers to defer income tax on capital gain realized (typically on the difference between the property's adjusted basis and the sale price) from sale of investment property ("relinquished property") which is held by the taxpayer for investment or productive use in a trade or business by reinvesting the proceeds in another property of like kind ("replacement property"). A 1031 exchange is possible only when you sell real estate held for investment purposes. It cannot be used for the sale of your personal residence. Consult IRS rules for the definition of like kind and what types of properties qualify as like kind.

In order to preserve the exchange element and prevent taxpayers from merely selling relinquished property and buying replacement property, a taxpayer's access to the sales proceeds is restricted during the exchange period by requiring a third party (qualified intermediary, trustee or escrow agent) to hold the proceeds and disperse the same for the replacement property. At closing, proceeds are transferred to the third party acting as a facilitator to hold the funds until they are used to acquire the new property. The seller is allowed up to 45 days from such sale to identify the like-kind property where sales proceeds are to be applied.
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What is FIRPTA ?
FIRPTA stands for Foreign Investors in Real Property Taxation Act of 1980, which is part of the Internal Revenue Tax Code. The Act was enacted with the intent of recovering at least a portion of the taxes (based on the Sale Price and not the proceeds to the seller) due on the sale of real property by a foreign seller. A foreign seller may be a Non-Resident Alien individual, corporation, partnership, trust or estate.
The code requires that on all transactions over $300,000 the buyer withhold 10% of the purchase price from the seller at closing, and remit the withheld amount to the IRS along with Forms 8288, 8288A & 8288B completed and signed by the buyer, within 20 days of the closing. All parties to the transaction must have a TIN (Taxpayer Identification Number), which may be a Social Security Number or an ITIN (Individual Taxpayer Identification Number) assigned by the IRS via a W-7 application form. Buyers and sellers are advised to check and confirm necessary actions for complying with this code and also for exceptions applicable under certain conditions.
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NOTHING STATED HEREIN IS EITHER INTENDED OR SHOULD BE CONSTRUED AS LEGAL OR FINANCIAL ADVICE. THESE GENERALITIES ARE MERELY INFORMATIVE AND MAY WARRANT VISITORS TO CONDUCT THEIR OWN DUE DILIGENCE IN ACCORDANCE WITH THEIR LEGAL AND/OR FINANCIAL GUIDANCE.