Lost, forged, or incorrectly filed deeds.Deeds are the documents that show who owns the property, and if not filed correctly, can lead to unclear ownership rights. This can include titles filed in the wrong name or titles never filed at all. Guaranteeing, or offering to guarantee, the performance or services of any settlement producer.
“Title agent” is a person, firm or corporation appointed by a title insurer to solicit applications for insurance or to negotiate for title insurance contracts on its behalf, and if authorized to do so by the insurer, to prepare and countersign title insurance policies and contracts. NRS 692A.100Licensing of title agents, title insurers and escrow officers; maintenance and examination of records; separation of money held in escrow. You can purchase title insurance directly from a title insurance company or an individual agent licensed to sell title insurance. You can utilize the LDI’s Search for Company or Agent feature to find companies and individual agents licensed to sell title insurance in Louisiana. When purchasing real estate, your lender will likely require title insurance. The coverage allows the lender to sell the mortgage to their investors and keep more money available for other loans.
The loss ratio for the industry was 11.8% in 2011 and the expense ratio was 100.9%. Title insurers historically have low loss ratios because title underwriters perform extensive underwriting research on subject properties before issuing a title policy. The research title insurance companies perform prior to issuing a policy is both extensive and expensive. Research costs, the need to fund long-tail loss reserves and high allocated claims expenses when a claim does occur, cause title insurance expense ratios to be higher than other property/casualty lines of insurance.
The Housing Affordability Index measures housing affordability as represented by a household earning the median income to qualify for a mortgage loan with a 20% down payment on a median-priced home. An index of 100 means a typical family has just enough income to afford a median-priced house. This figure has continued to show steady improvement since 2006 when the housing boom effectively ended, and is now at its highest level in several decades. However, the ability to buy is not the same as the facility to buy, as many borrowers are unable to qualify for mortgages due to tighter credit market conditions. File and Use — Insurers set rates, but they cannot be charged until the regulator has been notified and has allowed time for review and action, if necessary.
The regulations are available for viewing in the Adobe Acrobat format. To search for a particular regulation, you may use the search feature in your web browser by pressing “Ctrl” + “F” on your keyboard (Command + “F” on a Mac). Read all title insurance documents you get at closing, including the fine print. Ask questions if any items are unclear; or if any terms, conditions or amounts are not in line with something you may have been told before closing.
In many of these states, the state supreme court also has not defined the practice of law to include the closing of the transaction. In such states, a loan is typically closed by a non-lawyer, and the closer’s job title is closing officer or escrow officer. The colonial states adopted most of their practices concerning real estate from the English common law. Under the customs derived from English, French and Dutch law, the parties to the real estate sale gather at one table and exchange the deed for the money, and sign all loan and other ancillary documents in each other’s presence.
There are other important factors that lead to variations in the cost of title insurance but that are not related to claim losses, and which have never been systematically studied by researchers. It is not uncommon for a rate to change by 15% from one promulgation or filing date to the next. Also, the rate is graduated based on the amount of the policy, rather than being a fixed dollar amount for every increment of insurance coverage. The premium rate per increment of coverage declines as the policy amount increases. In Michigan, there is a different rate filed by each title insurer for the several counties in the area of Grand Rapids, known as the “Kent County Area” rate schedule. In Arizona, most if not all title insurers file special rates in Maricopa, Pima, Pinal and Santa Cruz counties, and a different rate schedule for all other counties in the state.
For instance, for both a patriot search and a bankruptcy search, a title insurance corporation or agent may charge no more than 200% of the out-of-pocket cost paid for the search, or 200% of the fair market value of the search as charged by a non-affiliated third party. For a recording fee, a title insurance corporation or agent may not charge more than $25 per document plus the out-of-pocket cost charged by the governmental office. However, for overnight mail charges, fees are limited to out-of-pocket costs, and for escrow services, a title insurance corporation or title insurance agent may not charge more than $50 per escrow.
For more information about title insurance read the Nevada Consumer’s Guide to Title Insurance. The Nevada Division of Insurance provides a guide to title insuranceand a rate comparison tool to help you as you shop. Prices for both an owner’s and lender’s policy combined can range from $1,046 to $1,407 for $150,000 worth of coverage in Clark County. If the license is inactive due to non-compliance with continuing education, you cannot write business until the requirements are filed and the license is reactivated. Although negotiable, it is customary for the property seller to pay for the owner’s policy.
As a result, timing differences occur in the reporting of losses and loss-adjustment expenses for title insurance when compared to other lines. In addition to known claims, title insurers – unlike insurers in other lines – carry a statutory liability known as the statutory premium reserve that provides ultimate loss protection for policyholders. In addition, with the requirement that each real estate parcel be evaluated and insured based upon the myriad and varying local laws, customs and records, the traditional insurance structure of local marketing and home-office underwriting cannot reasonably and cost-effectively be maintained in the title insurance industry. Since real estate laws, customs and practices vary, at least on a state-by-state and sometimes on a county-by-county basis, it has not been practical for underwriting to be performed on a national basis by a team of underwriters in the home office. Therefore, the economies of scale – made possible by establishing a centralized, skilled technical support staff of actuaries and underwriters to price products and make underwriting decisions – are absent in the title industry. Property/casualty underwriters are concerned with determining the probability of loss based on the characteristics of the insured risk.
In published-rate states, the only way to determine what a particular insurer stated it would charge for a policy is to view the rates it had published as of the date the policy was issued. In published-rate states, the insurer is free to change its rates at will, and to give a special rate to a customer for almost any reason, including to match a competitor’s price. Georgia and Indiana have recently adopted laws mandating the filing of rates for title insurance, converting the state from a published-rate to a filed-rate state.
Cloud exists on the title when there is reason to believe there could be a future claim against the title to the property. Clear Title is a title that is free from defects which may encumber the owner’s right to the peaceful enjoyment of the property or which may cause the owner to lose any portion of it. Please visit the Consumer Financial Protection Bureau internet site at for additional information on the Real Estate Settlement Procedures Act and disclosure requirements regarding these ancillary fees.
For instance, California law permits title agencies to provide branded promotional items but limits the cost of such items to $10 or less. Colorado regulations prohibit marketing services agreements, and Florida prohibits a title agency from paying for food, beverages, or room rentals at events for referral sources. In addition, in March 2017, Minnesota regulators took action against a title insurance agency and a real estate agent based on numerous free meals, hotel accommodations, and other perks provided by the title agency to the real estate agent in return for title insurance referrals. Just as title insurance companies and agencies in those states have had to adjust how they promote their businesses to comply with regulatory standards and in response to enforcement actions, companies in New York now have explicit parameters to ensure any marketing and promotional activities do not constitute impermissible inducements. The most important factor is that, as with other lines of insurance, premiums are based on the policy amount.
Title Insurance Premiums
Such update shall include all impairments of record at the time of closing or as close thereto as permitted by the real estate records. The title insurance company shall be responsible to the proposed insured subject to the terms and conditions of the title commitment, other than the effective date of the title commitment, for all undisclosed matters that appear of record prior to the time of closing. The title insurance activities of search and examination generally are carried out locally, because the public records to be searched are usually only available locally. This activity might be performed by directly owned branch operations of the insurer or by title agents. Payments to a title agent not only reflect an origination commission but incorporate underwriting, loss-prevention and administration costs that title insurers would incur if policies were issued directly. These unique characteristics of the title insurance industry, combined with the necessity of maintaining a title plant or searching public records, contribute to the high fixed costs, the high ratio of salaries to total expenses and the high percentage of total revenues retained by agents.
The need for title insurance was created by the case of Watson v. Muirhead 57 Pa. 161. In that case, the buyer employed a conveyancer to examine the seller’s title and the Court held that the conveyancer was not negligent when he ignored, on the advice of counsel, the existence of a recorded judgment against the property. Accordingly, the innocent purchaser of the property suffered a failure of title, but had no recourse against the conveyancer because, although he had been wrong, he was not negligent. Accordingly, title insurance developed to provide some financial security relative to real property interests which was not based upon negligence. Numerous defalcations have occurred in Colorado resulting in losses to Colorado consumers and insurers.
However, at one end of the spectrum, very few of the tasks concerning issuance of title insurance policies are considered the practice of law, while at the other end of the spectrum some states consider almost every aspect of the searching and examination of title and the issuance of the policy to be the practice of law. There are certain loss principles that apply to a lender’s policy but not an owner’s. To begin with, although ALTA has labeled a title insurance policy issued to a lender as a “Loan” policy, that name is a misnomer.
The Department is charged with making sure Florida consumers are not deceived by our licensees when they purchase title insurance and close on a property. The charge to each provider should be equal to that provider’s share of the advertising cost in direct proportion to its prominence in the advertisement. For example, if realtor content takes up 80% of the total ad space, while title agent content takes up only 20%, the most the title agent/agency should pay is 20%.
Most title agencies provide a disclaimer stating where they obtained the tax information and advise the involved parties if the amount is wrong it’s that person’s responsibility to pay the difference. This disclaimer is usually provided when the title agent/agency has reason to believe they have been given an inaccurate amount. If you want to file a request for assistance against your title company or insurance company. Discounts may be available for first time buyers and for others with special circumstances. Always ask your title company or its title marketing representative about available discounts.
Regulation Of Title Insurance
The Commissioner may require that all policy forms used by every company covering title risks in the District be filed with the Commissioner. The Commissioner shall have authority to disapprove, within 60 days after the date of the receipt of a filing, the use in the District of any policy form which is inequitable, or does not comply with District law. Acting as broker, agent, representative, or attorney of a person who buys or sells any interest in real property or who lends or borrows money with the interest as security. Every title insurance report or policy must be based upon a search covering of at least 30 years that examine all matters of record affecting title to, and that may impair the marketability to or limit the full enjoyment of, the property.
You have the RIGHT to receive an itemized settlement statement from the settlement agent detailing all fees paid to the settlement agent before you agree to use that settlement agent. Providing or offering to provide non-title services, without a charge that is commensurate with the actual cost thereof. See Benjamin J. Healey, What Investors in Mortgage Loans Are Demanding in Title Insurance, in Title News, Volume XXXV, Number 5, May, 1956, at p. 15 (“… under system the lender is a self-insurer and I assume that the risk is taken into consideration as his cost of doing business.”). Another factor is whether a state permits the insured to sue both under the policy’s terms and in tort, for what is termed “abstractor liability.” States that allow abstractor liability claims create higher loss payments on otherwise comparable claims, which leads to increases in premiums. States in which full-service title companies are common include Michigan, Ohio, Pennsylvania, Indiana, Missouri, Illinois, Wisconsin, Minnesota, North and South Dakota, Nebraska, Kansas, Colorado, Wyoming, Montana, Idaho and Utah. However, there is no uniformity from state to state as to the offices designated to serve as the custodian for documents such as deeds and mortgages that are recorded for the purpose of giving constructive notice.
The Secretary, upon application and proof that forced sale of any such investment would be contrary to the best interests of the title insurer or its policyholders, may extend the period for disposal of the investment for a reasonable time. A title insurance company licensed to do business in this State shall retain at least $100,000 of primary liability for policies it issues, unless a lesser sum is authorized by the Secretary. A lesser sum may be retained at the request of an insured for a particular policy. This subsection applies only to policies issued on or after the effective date of this amendatory Act of the 94th General Assembly.
Your lender is required to give you a list of companies in your area that provide the services you can shop for. Or, you may be able to choose companies that are not on the list if your lender agrees to work with your choice. Faced with rising operating costs and reduced revenue, small local title agents will cut staff or close up shop.
How do I get title insurance after closing?
Where Do You Get Title Insurance? You are free to choose where you want to get title insurance, but usually the process is initiated by your closing agent, real estate attorney if there is one, or your escrow agent. The good news is, getting title insurance doesn’t have to be difficult.
What are the differences between a reverse mortgage and a home equity loan? With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest. A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments. With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.
Check to see that the effective date given on the policy matches the actual closing date of the escrow. Studies, Reports & PublicationsMarket share reports, consumer complaint study, residential and commercial earthquake insurance coverage study, annual report of the commissioner, and more. FraudFraud Division OverviewThe Fraud Division investigates suspected fraud committed by consumers or organized criminal elements perpetrated against insurance companies. Producer Mailing ListsMailing lists for active individuals, agencies, and insurance companies and order forms. Virtual Viewing RoomThis virtual viewing room allows you to see insurance company rate filings, examination reports, and related information. The following illustrations provide additional guidance on the meaning and coverage of the provisions of RESPA.
Licensed Title Insurers
G. Unless prior written authorization has been received by all necessary parties, fiduciary funds shall not be deposited by a title entity into a treasury management account or any other type of investment account. What, if any, title or settlement services the title entity has contracted to other sources. Advancing or paying into escrow, or offering to advance or pay into escrow, title entity funds as provided in Division Regulation Section 5.J.1.
In the event your home is totally destroyed, you would have copies of all of your important documents you may need to settle a claim with your insurance company. This may include a copy of the Closing Disclosure Form, title commitment, sales contract, escrow agreement, title insurance policy, all closing documents, etc. It is also good to keep a record of the title insurance agent and agency used for the sales transaction. You may also purchase, at an additional cost, optional endorsements to cover risks that are not included in the standard or extended coverage title insurance policies. Endorsements are available to provide coverage against environmental protection liens, enforcement of covenants, conditions and restrictions, damage due to water and mineral development, accuracy of boundaries, and other potential risks.
“Underwrite” means to accept or reject, or have the authority to accept or reject, risk on behalf of a title insurer. Title insurer” means any title insurer incorporated or organized under the laws of any foreign nation or any province or territory. “Net retained liability” means the total liability retained by a title insurer for a single risk, after taking into account any ceded liability and collateral, acceptable to the Commissioner, maintained by the insurer. “Foreign title insurer” means any title insurer incorporated or organized under the laws of any other state of the United States owner’s title insurance texas or any other jurisdiction of the United States. “Escrow” means written instruments, money, or other items deposited by one party with a depository, escrow agent, or escrowee for delivery to another party upon the performance of a specified condition or the happening of a certain event. In certain transactions, the Real Estate Settlement Procedures Act (“RESPA”), specifically, Section 3500.8, requires that the HUD-1 and HUD-1A settlement statements must be completed by the person conducting the closing and must conspicuously and clearly itemize all charges related to the transaction.
This search typically involves a review of land records going back many years. More than one-third of all title searches reveal a title problem that title professionals will insist on fixing before the transaction closes. For how long is title insurance good for instance, a previous owner may have had minor construction done on the property, but never fully paid the contractor (resulting in a mechanic’s lien), or the previous owner may have failed to pay local or state taxes .
Provide or pay for gift cards or gift certificates for referral of business. Provide or pay for food, drinks or room rentals at events designed to promote their business. When purchasing a mobile home, ownership is evidenced by a title similar to an automobile title rather than a deed. Titles are regulated and issued by the Department of Highway Safety and Motor does having a salvage title affect insurance Vehicles. Property Encroachment occurs when one person’s property extends onto the property of another. Easements as defined by the Florida Supreme Court are legal rights imposed on actual and physical property; a privilege without profit under which the owner of one property has a right to enjoy that interest over the property interest of another person.
Of this regulation, is required to be filed with the Division and includes insurance rates a consumer may be charged during a real estate transaction. If one or more of the justification items are not provided in the proposed filing, the title insurance company must explain and support with specificity the rationale for not including the listed piece of information in the filing. The Division will determine whether the proposed rationale for omission is valid. If the Division concludes that the omission is invalid, the title insurance entity will submit the required justification within fifteen calendar days from the date of the objection letter.
As such, the title search can eliminate most of the risk from the transaction. One of the conditions that lenders place on the buyer is that a lender’s title insurance policy must be purchased in an amount equal to the mortgage loan. However, a lender’s policy only protects the financial institution in the event that a valid title claim arises.
There are four general categories of rate systems used by the various states for title insurance are described below. You may work as a title agent if you are a licensed attorney through the North Carolina State Bar or a licensed (non-attorney) title agent through the North Carolina Department of Insurance. Thus, the approved attorney is “approved” by the insurer only in the sense that the insurer has agreed to accept his or her examination or opinion of title in issuing the policy. One major difference in customs that divides the states is whether real estate transactions are closed through escrow or at a closing table. “Title insurance company” means any company licensed to transact, or transacting, title insurance in this Commonwealth.
Who Pays The Premium For The Title Policy?
An action may not be commenced after the expiration of 3 years following the commission of the act on which the action is based. The deposit must be in an amount at least equal to the required surety bond and must state that the amount may not be withdrawn except by direct and sole order of the Commissioner. The value of any item deposited pursuant to this section must be based upon principal amount or market value, whichever is lower. Reserves against unpaid losses and loss expenses maintained pursuant to NRS 692A.150 or 692A.170. The Commissioner shall adopt regulations to carry out the provisions of this section.
Instead, they use assumptions and extrapolation methods that are detailed in Reserving Characteristics. Length of time the property has been owned or encumbered by mortgages or liens. Unskilled and part-time personnel can satisfy the need for an increase in title messengers or clerks, but they typically cannot fill the roles of more highly skilled positions, such as title searchers and underwriters. Differences in the proportion of agency business versus direct business. The provisions of sections 38a-400 to 38a-425, inclusive, shall be severable, and, if any of their provisions are held to be unconstitutional or invalid, the validity of the remaining provisions of said sections will not be affected.
Met all the requirements to assure title is transferred to the new owner, properly, as outlined in the closing documents and sales contracts. Disbursed the escrow funds as specified in the sales contract, settlement statements, and any other escrow agreement. We’ve communicated information related to law, including the rule, to the Florida Department of Business and Professional Regulation and the Florida Realtor’s Association. Any person or persons who violate the prohibitions or limitations of subsection of Section 21 of this Act shall be liable to the person or persons charged for the settlement service involved in the violation for actual damages. Any person or company subject to an order pursuant to this Section is entitled to judicial review of the order in accordance with the provisions of the Administrative Review Law.
Even in this apparent unregulated situation, a regulatory body still is charged with overseeing the title insurance industry and can question the propriety of a rate that appears to be unfairly discriminatory or otherwise violates statutory standards. Each title insurer and title agent shall print and make available to the public schedules of its currently effective premiums and charges. No license may be issued, renewed or continued for a title insurer or title agent who fails to comply with this section. Such title insurer shall include such affidavit and a copy of the proposed reinsurance treaty with the application filed by such insurer with the commissioner.
The provisions of NRS 683A.321, 683A.331, 683A.341, 683A.400, 683A.451 to 683A.490, inclusive, and 683A.520 apply to title insurers, title agents and escrow officers. Applicability of other provisions to title insurers, title agents and escrow officers. The Commissioner shall adopt regulations defining the term “commingling” for the purposes of this chapter and prescribing acceptable business practices for title agents and escrow officers for handling money deposited in escrow. Each title insurer shall maintain records and evidence of its search and examination and of its determination of insurability for a period of not less than 5 years after the date of the policy or contract.
In Southern California, the title and escrow transactions are separate with escrow being provided by banks, escrow companies, or title companies. Practices and prices will vary from county to county, so be sure you understand your individual transaction. The person who pays for the policy selects the title insurance company. Be sure that any title company you select meets your standards and those of your lender. Ultimately, the choice of which title insurance company to select is yours. You may want to contact more than one title insurer or underwritten title company to compare costs and services.
Crediting a charge paid for an ownership and encumbrance report to the final premiums or fees paid upon the consummation of the transaction contemplated by such ownership and encumbrance report. For the duration of this Agreement, the Closing Agent shall obtain and cause to remain in effect insured closing letters from the Title Insurance Company in form and content acceptable to the Bank/Warehouse Lender (the “Insured Closing Letters”). The Insured Closing Letters shall be addressed to the Bank/Warehouse Lender and to the Mortgage Lender and shall not be cancelable except with ten days prior written notice to the Bank/Warehouse Lender and the Mortgage Lender. A copy of the Insured Closing Letter shall be delivered by the Mortgage Lender to the Bank/Warehouse Lender prior to any request for confirmation pursuant to paragraph 3 hereof. P. Every title entity shall maintain adequate documentation and records sufficient to show its compliance with this regulation and Title 10 of the Colorado Revised Statutes for a period of not less than seven years, except as otherwise permitted by law. A 2008 study revealed that homebuyers who used “one-stop shopping” in their latest real estate transaction were more satisfied with their home buying experience compared to those who used services of multiple providers.
A title insurance policy indemnifies the insured in the event it suffers “actual monetary loss or damage” due to a defect in title.The policy indemnifies the insured if title fails, or there is an encumbrance or lien on the title, and also if there is a lack of a right of access to the property or the title is unmarketable. One important part of a mortgage loan is the issuance of a title insurance policy. The policy insures the lien of the mortgage or lien given to the lender as security for the loan. As a result, many terms used in the lending, loan closing and title businesses have different definitions in the various states; also, there are many tasks or functions that have a number of different labels from state to state. For example, the person who closes a loan may be termed the loan closer, settlement agent, closing agent, escrow officer or closing attorney.
North Carolina works under the “approved attorney system” wherein the authorized practice of law in the state has licensed attorneys, or paralegals under the direct supervision of a licensed attorney, conducting real estate closings. This unusual uniformity of policy forms in this line of insurance is a direct result of the process that led to the formation of the first title insurer, and the evolution of the product during the first half century of its existence. The second aspect of the indemnity contract principle is that the measure of loss is the amount of money or value lost by the insured due to the covered matter. The coverages in the title insurance policy are limited to matters which exist on the date of policy. There are many different terms used for title searches and examinations, some of which are synonyms and others of which have more narrow or specialized meanings.
In many states, the grantee whose transaction is recorded first becomes the legal owner, and any other would-be buyers are left without recourse. A loan policy provides no coverage or benefit for the buyer/owner and so the decision to purchase an owner policy is independent of the lender’s decision to require a loan policy. For purposes of this paragraph, the term “single source” means a person that refers business to the title insurer and any other person that controls, is controlled by, or is under common control with, that person. Before being licensed to do an insurance business in the District, a title insurer shall establish and maintain a minimum paid-in capital of not less than $500,000 and paid-in initial surplus of at least $500,000, for a total minimum capital and surplus total of at least $1 million. “Abstract of title” or “abstract” means a written history, synopsis, or summary of the recorded instruments affecting the title to real property. With some exceptions, anyone who “sells,” “solicits,” or “negotiates” insurance must be licensed as an agent.
Two types of title insurance policies for real property are the most common – a lender’s policy and an owner’s policy. Title insurance protects real estate purchasers and/or lenders from losses that arise after a real estate settlement as a result of unknown liens, encumbrances or other defects upon the title that existed prior to settlement. Examples of title defects include outstanding property taxes not paid by a previous owner, fraud or forgery of a prior deed or transfer, or a spouse or unknown heir who steps forward to make a claim against the title.
Title insurance involves the acceptance of past transactional events rather than future occurrence events associated with all other property and catastrophe exposures. Title insurance policy does not include a preliminary report, binder, commitment or abstract. Charged the correct premium for the title insurance policy and each of the policy’s endorsements. At the termination of the receiver’s administration, the receiver shall petition the court for the entry of a judgment of dissolution. After a hearing upon the notice as the court may prescribe, the court may enter a judgment of dissolution whereupon the title insurance company’s corporate existence shall be terminated and the receivership concluded.
No insured named in a title insurance policy, no producer of title insurance business, no associate of a producer, nor any other person, other than another title agent, may knowingly receive or accept, directly or indirectly, any commission, rebate, consideration, thing of value or inducement referred to in subsection of this section. “Controlled business” means any portion of a title insurer’s or title agent’s business of title insurance in this state, referred to it by any producer of title business or by any associate of such producer, where the producer of title business, the associate, or both, have a financial interest in the title insurer or title agent to which business is referred. Such notice shall contain the name, address, and tax identification number of the debtor, the permanent real estate index numbers, if any, and the address and legal description of the property, the type of lien claimed by the Department and identification of any trust fund or similar account held by such corporation or any agent thereof relating to such lien. Any trust fund or similar account established by such corporation or agent relating to any such lien shall include provisions requiring such corporation or agent to apply such fund in satisfaction or release of such lien upon written demand therefor by the Department of Revenue.
Title insurance policyholders depend on state insurance departments to make sure title insurance companies have the financial means to respond if and when they file claims 20–30 years in the future. The Escrow Theft White Paper Subgroup has been charged to examine ways to mitigate the impact of title insurer and agent insolvencies on policyholders. The Subgroup has begun work on a white paper that is intended as a tool for regulators to research methods for combating and preventing escrow theft, title insurance theft and other forms of fraud associated with title insurance and closing services transactions.
- A Brokers Open, Brokers Open House, and certain Builders events are times when a title agency should be extra cautious of violating the Florida Insurance Code and RESPA.
- “Abstract of title” means any written representation listing all recorded conveyances, instruments and documents which, under the laws of this State, impart constructive notice with respect to the chain of title of the real property described therein.
- The Commissioner, through the Mayor, pursuant to subchapter I of Chapter 5 of Title 2 [§ et seq.], may issue rules to implement the provisions of this chapter.
- When issuing a commitment for title insurance, a title entity may give, without charge, copies of the supporting title documents for the property.
No person or organization shall willfully withhold information from, or knowingly give false or misleading information to, the commissioner, any statistical agency designated by the commissioner, any rating organization, or any insurer, which will affect the rates or premiums chargeable under this chapter. New title insurance regulations in New York restrict the marketing practices of title insurance agencies and affect the operation of affiliated businesses. Engage in all or substantially all of the core title services with respect to the affiliated business and require that core title services include the clearance of title exceptions.
An owner’s title insurance policy affording title insurance protection to you in the amount of your purchase price, or for the amount of your purchase price plus the cost of any improvements which you anticipate making, may be purchased by you. NRS 692A.210 requires that you sign the statement printed below if you do not wish to purchase an owner’s title insurance policy. Take action incidental to the making of a contract or policy of title insurance, directly or through a title agent or escrow officer employed by the title insurer, including the conducting or holding of money in escrow, making settlements and closing transactions. “Single risk” means the insured amount of any policy or contract of title insurance issued by a title insurer unless two or more policies or contracts are simultaneously issued on different estates in identical real property, in which event it means the sum of the insured amounts of all such policies or contracts. Any policy or contract which insures a mortgage interest that is excepted in a fee or leasehold policy or contract, and which does not exceed the insured amount of the fee or leasehold policy or contract, shall be excluded in computing the amount of a single insurance risk. The financial strength and surplus of title companies, however, might be more critical than that of property/casualty underwriters.
In rating bureau states, the rates filed by the bureau may be used to determine if the filed rate was charged on a particular transaction. The comparison must be made using the rating bureau rates in effect on the date of the loan closing, and may only be used if the title insurer was a member of the rating bureau. In several other states, all or most title insurers who write insurance in the state file a joint premium manual through the auspices of a rating bureau. Those states’ filing systems may allow an insurer to vary from the rating bureau filed rates, but generally all title insurers who are members of the rating bureau do not vary from the rates filed by the rating bureau. It is very common in attorney-controlled states for a law firm to own a title insurance agency.
When you refinance your home or take out a new mortgage, the lender seeks protection for its investment by requiring the purchase of a lender’s title insurance policy to protect against losses resulting from claims made by others against your new home. Title insurance premiums are based on the dollar amount of coverage provided. Every title insurance company is required to file its schedule of rates and forms with the Insurance Commissioner. Under California law, every title insurer, underwritten title company , and controlled escrow company must file its schedule of rates, forms, and rate modifications with the Insurance Commissioner. Since each company’s loss experience and expenses differ, the rates will differ as well, so you can save money by comparing rates.
Title insurance protects you and your lender financially from any unknown claims or defects in the title of the property you are buying. No, Section 14 of Rules 87 states that “Settlement or Closing Protection Letters shall, if requested by a party to a closing handled by the title insurance agent, be issued to the requesting party…”. If the closing is not handled by the title insurance agent, there is no requirement to issue a CPL.
New York State Supreme Court Annuls State Title Insurance Regulations https://t.co/nyjaTi1kQ3
— Gibson Dunn (@gibsondunn) July 9, 2018
This is different from other types of insurance policies, such as auto or life insurance, which protect against losses resulting from accidents or events that occur after the policy is issued. A title policy is usually paid for with a one-time premium that is handled at the closing of the real estate transaction. While title insurance agencies and title insurance companies in New York may be used to the DFS’s expansive historical interpretation of the anti-inducement statute in Section 6409 of New York Insurance Law, those entities may still find themselves adjusting their business practices to comply with the DFS’s explicit guidance on inducements. Moreover, as affiliated business arrangements remain a popular business venture between real estate brokers, mortgage lenders, and title entities, the final regulations are a reminder that affiliated businesses must be structured carefully to ensure compliance with New York law. Should you have any questions about these final regulations or the implications on title insurance businesses, please let us know.
An owner’s policy protects you for the purchase price of your home plus legal costs if a title or ownership issue arises. It is usually issued for the amount you paid for your home and will cover you as long as you own an interest in the property. An owner’s policy is not required but is a good idea to protect your own financial interest in the property. The purpose of this regulation is to set forth the title insurance agent licensing requirements.
Title insurance is available in many other countries, such as Canada, Australia, the United Kingdom, Mexico, New Zealand, Japan, China, South Korea, and throughout Europe. However, while a substantial number of properties located in these countries are insured by U.S. title insurers, they do not constitute a significant share of the real estate transactions in those countries. They also do not constitute a large share of U.S. title insurers’ revenues.
They can arise in the context of the transfer of upscale, single-family residential properties; single family or multifamily real estate developments; or office buildings, shopping centers or other commercial developments. Overlapping tasks and regulatory hurdles involved with these complex transactions complicate these claims. For instance, often there are entitlement issues, easement, ingress/egress issues and mechanic-lien risks associated with construction.
Cyclicality in a line of insurance creates challenges but isn’t always a negative quality, since it creates opportunities for well-managed companies. In such businesses, management must make sure the company’s operating structure is flexible and responsive to both increases and decreases in revenue over a relatively short period. A well-managed company must be able to access trained staff to service business adequately when demand for title insurance is rising.
For this reason, these policies greatly facilitate the sale of mortgages into the secondary market. That market is made up of high volume purchasers such as Fannie Mae and the Federal Home Loan Mortgage Corporation as well as private institutions. The final arbiters of title matters are the courts, which make decisions in suits brought by disagreeing parties. Historically, the person who wanted to understand the title would hire an abstractor to write a property abstract showing the chain of title. However, if the abstractor makes an error, the client may only be compensated if the attorney is negligent, subject to the limit of his financial responsibility .
The American Title Association Standard Loan Policy of Title Insurance, 8 Title News, July, 1929, p. 5. The life insurers suggested changes that were made, and then approved the policy form. Fannie Mae, Freddie Mac, the FHA and other governmental bodies involved in mortgage lending have specifically approved the ALTA Loan policy form. The variants on that policy form adopted in Texas, Florida and Iowa have also been vetted by the governmental mortgage lending agencies. States that do not follow the escrow system are called table closing states.
Other studies have come to the same conclusion.A 2012 study put the range of “average” title insurance policy charges as being from $700 to $2,190.A 2008 study estimated that the national “average” charge for an FHA loan title insurance policy was $1,200. In every jurisdiction, there is more than one premium rate that may apply. In addition, there are many types of discounted rates offered by title insurers, depending on the jurisdiction and the insurer. The three discounted rates that are most commonly associated with refinance loans are called the refinance rate, the reissue rate and the substitution rate. In states having more than one set of regional premium rates, one cannot accurately calculate the title insurance premium without considering the region in which the property is located.
However, the Appellate Division remanded certain aspects of the case back to the Supreme Court, and Rakower once again annulled the entire law. She ruled on Monday that the regulations are “impermissibly vague” and in violation of the First and Fifth Amendments of the Constitution. You have the RIGHT, before you sign, to ask the settlement agent questions and receive clear and complete answers about charges and documents that you do not understand. Exhibits B and C above are typically requested as part of the review of prior approval rate filings.
If the board of directors or any officer or person in charge of the offices of such a title agent refuses to permit the Commissioner to take possession of the property, the Commissioner shall communicate that fact to the Attorney General. Thereupon the Attorney General shall immediately institute such proceedings as may be necessary to place the Commissioner in immediate possession of the property of the title agent. The Commissioner thereupon shall make or cause to be made an inventory of the assets and known liabilities of the title agent. Instructed an escrow officer to commit an act which would be cause for the revocation of the escrow officer’s license and the escrow officer committed the act.
Although this web site is updated on a regular basis, the Insurance Commission cannot guarantee the accuracy or completeness of the site’s contents and disclaims liability for errors and omissions in the contents. The official version of all Insurance Commission rules is maintained by the West Virginia Secretary of State and may be accessed through that office or through its web site. When relying upon any Insurance Commission rule, you are advised to obtain a copy of that rule from the office of the Secretary of State.
The purchaser-mortgagor may obtain an owner’s title insurance policy protecting the property owner at a specified cost or approximate cost, if the proposed coverages or amount of insurance is not then known. “Please read the exceptions and the terms shown or referred to herein carefully. The exceptions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. A policy under which a claim payment reduces the amount of insurance under one or more other title insurance policies shall be included in computing the single risk sum only to the extent that its amount exceeds the aggregate amount of the policy or policies whose amount of insurance is reduced.
A license which is not renewed expires at midnight on the last day specified for its renewal. The Commissioner may accept a request for renewal received by the Commissioner within 30 days after the expiration of the license if the request is accompanied by a fee for renewal of 150 percent of all applicable fees otherwise required, except for any fee required pursuant to NRS 680C.110. The license may be renewed by payment of all applicable fees for renewal to the Commissioner on or before the last day of the month in which the license is renewable.
A closing protection letter shall not be issued by a title insurance agent. The provisions of this subsection shall not apply to the authority of a title insurance agent to act as an escrow agent under subsection of Section 17 of this Act. The liability limit of the owner’s policy is typically the purchase price paid for the property.
Title insurance protects the property owner and mortgage lender against future claims for any unknown defects in the title to the property at the time of sale. The cost of title insurance is higher in New York State than in comparable states, as noted by DFS officials in a January 2018 written statement to the Assembly Standing Committee on Insurance. Much of the stability in the title industry’s loss ratio stems from the relatively low risk inherent in title insurance. The bulk of title insurance claims occurs shortly after closing and represents low-dollar costs.
Every title insurer and every title agent shall print and make available to the public the schedule of fees and charges filed with the Commissioner. An application for the issuance of a license as a title agent or escrow officer must include the social security number of the applicant. The Commissioner shall provide by regulation for the licensing of title agents, their branch offices, direct writing title insurers and escrow officers. “Abstract of title” means any written representation listing all recorded conveyances, instruments and documents which, under the laws of this State, impart constructive notice with respect to the chain of title of the real property described therein. The term does not include a binder, commitment to insure or preliminary report of title. Title insurance companies file annual financial statements with their respective state insurance regulators in accordance with statutory accounting principles.
For example, it is common for a rate manual to say that a refinance rate is available only if the title insurer or agent is provided with evidence that a title insurance policy was issued to insure the mortgage granted for the prior loan to be paid off. This requirement flows from the fundamental premise of discounted rates, which is that a lower rate is paid when another title insurance policy has been issued on the same parcel in the past. The reissue or refinance rate discount emanates from rate filings that granted “abstract surrender” credits. That “credit” or discount was given to an insured when he or she turned in the existing title abstract and converted to title insurance.A lender typically does not know if the title insurer or agent has received evidence of a prior policy. Thus, the lender has no way to know that a reissue, refinance or substitution rate discount could or should have been offered if it was not granted by the title company.
No person may act as a title agent unless he is a commissioner of the Superior Court in good standing, except any individual who held a valid title insurance license on or before June 12, 1984. “Applicant” means a person, whether or not a prospective insured, who applies to a title insurer or title agent for a title insurance policy and who, at the time of the application, is not a title agent. The Florida Insurance Code does not require the title agent, or agency, to meet these requirements on its own. Title agencies are permitted to hire outside parties to assist in the completion of these duties. When a title insurance agency does this, it must also include these fees in with its closing services fee that it advertises to the public and that it reports to the Office of Insurance regulation in its data filing for that year.
The buyer and seller should agree on the selected closing/title agent, but they may choose to do a split closing where the buyer uses one agency and the seller uses another. Title insurer means any company issuing title policies as insurer, guarantor or indemnitor. A title insurer must have a certificate of authority from the CDI to issue title insurance policies in California. If you suspect that a title insurance company, escrow company or title insurer is offering unlawful rebates or commissions, you can report this suspected activity to the California Department of Insurance. The choice of which title insurer to use belongs to the person who pays for the policy. Federal law, the Real Estate Settlement Procedures Act of 1974 (Public Law ), prohibits the seller from requiring you to purchase title insurance from any particular company.Please visit the Consumer Financial Protection Bureau internet site at for additional information on RESPA and title insurance.
The introduction of a new rate shall contain credible company experience to support the reasonableness of the rate. Any new rate that does not include specific Colorado data will require the title insurance company to submit a new filing no later than one year to include Colorado historical information in the justification for the new rate. If proper Colorado historical information is not available, a filing must be made annually from the effective date of the rate to include any new Colorado historical information justifying the new rate until credible experience has been established. Joshua Morris, a conveyancer in Philadelphia, and several colleagues met on March 28, 1876 to incorporate the first title insurance company.
The title insurance company, independent escrowee, or title insurance agent shall maintain the disclosure forms for a period of 3 years. Title insurance is a contractual obligation that protects against losses that occur when title to a property is not free and clear of defects (e.g. liens, encumbrances and defects that were unknown when the title policy was issued). The terms of the policy define what risks are covered and what risks are excluded from coverage. The title insurer will reimburse you or your lender for losses that are covered, up to the face amount of the policy, and any related legal expenses. This protection is effective as of the issue date of the policy and covers defects arising prior to your ownership. Title companies issue policies on all types of real and personal property.
There are regional patterns, but no two states operate exactly the same way. The result of all of this diversity of terms and practices is that the HUD-1 Settlement Statement may show a variety of charges in the 1100 series. For example, on a HUD-1 Settlement Statement, the fee for a title examination typically appears on Line 1103. However, it is not uncommon for the title exam fee to be called a title “search” or “opinion,” due to local practice, or to have that fee appear on a line other than 1103. Also, in some places, there are charges incurred for searches conducted in either public or private sets of real estate records, known as title “plants.” A title plant fee is sometimes labeled as such, or can be called a “search” fee or “access” fee, and may appear on lines 1101 through 1103.
Before issuing a title insurance policy, title companies search and examine title plants or public records to identify liens, claims or encumbrances on the property, and alert you to possible title defects. The premium cost is a one-time fee payable at the time of escrow closing.In contrast, homeowner’s insurance insures your house and contents and may provide coverage for losses due to fire or lightning, theft, vandalism, and personal liability claims brought against you, the policyholder. Homeowner’s premiums are often billed monthly, quarterly or annually and installment payment options are often available. Title insurers in California are not permitted to provide homeowners insurance to you. In addition to guidance on prohibited inducements, Section 228.5 of the new regulation establishes maximum charges for patriot, bankruptcy, municipal, or departmental searches, as well as flat fees for other services, including survey inspection and escrow services. Importantly, the regulations do not force title insurance companies and agencies to charge consumers only the out-of-pocket charges for many of those searches and services.
New post: New title insurance regulations delayed http://t.co/A0Uvk7tl
— Peter Jay (@westlaketitle) August 25, 2012
The title insurance entity may impose a charge for copies of schedules, but such charges shall not exceed the actual cost per page of reproducing the schedules, and copies shall be provided within three business days of receipt of a written request. As used in this section, “closing or settlement service provider” means a person employed or approved by a title insurer to perform the closing or settlement of a real estate transaction in which a policy of title insurance has been issued by or on behalf of the insurer and may include, without limitation, a title agent or an escrow officer. In Pennsylvania, the TIRBOP manual contains two very different sets of premium rates, one for policies issued by title insurers or agents and the other for policies issued by approved attorneys. In order to determine if the correct rate was charged on a Pennsylvania title insurance policy, one must know if the policy was issued by a title insurer, title agent or approved attorney. “Escrow, closing, or settlement services” means the administrative and clerical services required to carry out the terms of contracts affecting real estate. Such disclosure must be made in writing on forms prescribed by the Secretary prior to the time that the commitment for title insurance is issued.
Hence, this kind of financial leverage does not burden the property/casualty insurer with additional fixed charges and, as long as rates are adequate, it provides all the conventional benefits of leverage without much of the downside risk. Because of the large service and underwriting component of title insurance, its closest property/casualty counterparts are service, underwriting and loss-control-intensive sectors. Lines of insurance containing these features include surety, and boiler and machinery. Since title insurance is an evidence-producing/loss-prevention line of insurance, its loss expense is less than – and its operating expense is greater than – that of other property/casualty lines of business.
See D.B. Burke, Jr., Law of Title Insurance, Little Brown & Company § 1.1, p. 2. The following discloses the relative 2012 market shares among the four U.S. national families of title insurers , and the regional companies, i.e., those not affiliated with the national families. While 77% of respondents did not independently select their settlement company, when made fully aware of the ABA relationships 50% of respondents said they prefer a title company that does not share profits with a referral source compared to 6% of respondents saying they prefer a title agent that shares profits with a referral source. Further, 58% of respondents said they believe that ABAs are a conflict of interest. A recent survey from the Ohio Association of Independent Title Agents , conducted from 2009 through 2010, showed when homebuyers are made fully aware of ABAs, they become uncomfortable and prefer a title company or title agent to be a third party (i.e., independent) to the transaction. Despite advances in technology that allow homebuyers to shop for title services, many homebuyers remain unaware that they may select their own title insurance or settlement company.
Rates, rules and forms are subject to prior approval by the Commissioner before being implemented. If the replacement carrier is not domiciled in this State, then the replacement carrier must provide evidence that it has notified its domiciliary regulator of its intent to assume the business, and that the domiciliary regulator does not object to such action. This online version of the Arizona Revised Statutes is primarily maintained for legislative drafting purposes and reflects the version of law that is effective on January 1st of the year following the most recent legislative session. The official version of the Arizona Revised Statutes is published by Thomson Reuters. The Arizona Revised Statutes have been updated to include the revised sections from the 54th Legislature, 2nd Regular Session.
A purchaser, a seller, or a lender is each considered a single party to the transaction for the purposes of this Section, regardless of the number of people or entities making up the purchaser, seller, or lender. Any violation of any of the provisions of this Act and, beginning January 1, 2013, any violation of any of the provisions of Article 3 of the Residential Real Property Disclosure Act shall constitute a business offense and shall subject the party violating the same to a penalty of $1000 for each offense. In cases of suspension or revocation of registration pursuant to subsection , the Secretary may, in the public interest, issue an order of suspension or revocation which shall take effect upon service of notification thereof.
The average loss experience for the title industry improved over the past twenty years due to better up-front underwriting as well as more stringent monitoring of agents to help avoid defalcations. However, once the housing boom ended, there was a subsequent rapid increase in defaults and foreclosures that led to a significantly greater incidence of title claims arising out of those calendar years. These property/casualty reserves are debt, in that if a policy is canceled, the reserves are owed to the former policyholder, yet they bear no rate of interest.
Is an owner’s title insurance policy necessary?
Is Title Insurance Required? Lender’s title insurance is required, but owner’s title insurance is optional. An owner’s policy can protect you against losing your equity and your right to live in the home if a claim arises after purchase.
The Responsible Producer of an agency must complete the disclosure on behalf of the licensed agency. For the property/casualty industry, IBNR is derived from actuarial predictions of future occurrences based on current loss data, and it is an unsecured liability. The title industry’s statutory premium reserves are set by statute at a rate that is somewhat arbitrary.
Because title professionals can’t compete on price or product, they must compete on the quality of service they provide. Section 2139 of the Insurance Law was enacted in 2014, requiring every title insurance agent to be licensed by DFS. DFS is authorized to monitor abuses by agents and to suspend or revoke licenses when necessary. Additionally, compensating someone for a referral for title insurance is a violation of Section 6409 of the Insurance Law. Waiver of right to purchase owner’s title insurance upon issuance of policy to mortgagee; form of notice and waiver. Each domestic title insurer shall establish and maintain an unearned premium reserve composed of the unearned portions of premiums due or received, which shall be charged as a reserve liability of the insurer in determining its financial condition.
The Commission’s duties will include proposing, advising and recommending rules for the administration of the business of title insurance, subject to approval by the Insurance Commissioner. The Division of Insurance , part of the Department of Regulatory Agencies , will provide staffing and administration for the Title Insurance Commission. Since title policies have no termination date, the statutory premium reserve is required and is reduced gradually to reflect the long-tail nature of the company’s liability.
Title insurance policies cover the insured party for any covered losses and legal fees that might arise out of such problems. Within 10 days after each filing period, the commissioner shall post the schedule of rates for each title insurance company on the division of insurance’s website. Certain of those disclosures match required elements of the federal affiliated business disclosure form under RESPA. Both RESPA and the New York regulation require separate affiliated business disclosures, although it is not clear whether the DFS would permit the New York disclosures to be combined with the RESPA affiliated business disclosure form. It also is not clear whether federal regulators would take issue with the New York-required disclosures being added to the federal RESPA form. Thus, if an affiliated person seeks to combine the federal and New York disclosures, it should evaluate whether a combined form would be acceptable under both sets of requirements.
The Commissioner shall, with the approval of the Commissioner of Financial Institutions, adopt regulations prescribing the standards for determining whether a title insurer or title agent has maintained adequate supervision of a title agent or escrow officer pursuant to the provisions of this chapter. NRS 692A.240License as title insurer, title agent, escrow officer, escrow agent or escrow agency required to engage in business of administering escrows. The required segregation of assets to support reserves assures policyholders that the company will not utilize these funds to pay losses or other expenses in the ordinary course of business or make distributions to shareholders.
TIRSA, a not-for-profit corporation established by the Legislature in 1993, is the statistical agent of DFS and a rate service organization. In its role as a statistical agent, TIRSA is responsible for compiling statistics that track aggregate and individual insurer losses, as well as expenses and revenues for all title insurance companies in the State. As a rate service organization, TIRSA is responsible for submitting rate applications for DFS approval on behalf of insurers who authorize TIRSA to do so.
Underwriters have routinely provided standards to their agents and direct insurers; the new rule simply codifies the practice. A title entity may not give money or any other thing of value to a real estate broker or other settlement producer in exchange for an advertising benefit at an event. Title entities may participate in events if they maintain a physical presence throughout the event. For example, a title entity may have a table at an open house with refreshments and the title company’s marketing materials if an employee of the title entity is present and engaging in the promotion of the entity’s services.
In addition to the statutory premium reserve and the known claims reserve, the title insurers’ statutory financial statements provide for a supplemental reserve. Title insurers are required to have an actuarial certification of the adequacy of their reserves. If the actuary indicates that the statutory premium reserve plus the known-claims reserve is less than the estimated dollar value of known-plus-expected future claims – plus expected loss-adjustment expenses – the title company would have to fund the shortfall in the supplemental reserve. Since the supplemental reserve is not tax deductible, it is in the best interest of title insurers to have the statutory premium reserve as close as possible to actuarial estimates, if not actually more than the estimates. Under GAAP, the statutory premium reserve is not recognized as an expense and isn’t included as part of a title insurer’s liability. Title insurers that are required to file GAAP financial reports, or are part of a consolidated group of companies that are required to file under Securities and Exchange Commission rules, normally develop an IBNR component like any other insurance line and include it as part of their GAAP liabilities.
Is title insurance a ripoff?
Homebuyers can buy title insurance to protect themselves, but mostly, they’re buying title insurance to protect their mortgage lender. Most lenders don’t buy their own title insurance; they force borrowers to buy it for them.
When the required deposits have been made by a title insurance company, the Secretary shall certify that the company has complied with the provisions of this Section and is authorized to transact the business of insuring and guaranteeing titles to real estate. The Title Insurance Task Force and several of its working groups are looking more closely into these issues identified by the GAO. A subgroup of insurance regulators has begun work examining the feasibility of promoting effective consumer shopping for title agents and insurers without delaying real estate closing schedules. This subgroup is also working to develop best practices for the design and implementation of title cost comparison guides for consumers. The group is currently developing a checklist of items that should be included in a model guide for consumers. High access costs for title status databases from incumbent title insurers, arrangements between insurers and real estate brokerage service providers, reverse competition in kickbacks, and title agent fees, present significant barriers for new market entrants.
The fee paid for the owner’s title insurance policy that protects the buyer of the home; not applicable in a refinance. The fee charged for a lender’s title insurance policy that protects the lender’s security interest in the property. The extended policy provides greater coverage than the standard policy. Generally, the extended policy provides the same coverage as the standard policy, but also insures against defects, liens, encumbrances, easements, and encroachments and conflicts in boundary lines that are not reflected in the public records. Since an extended policy covers many “off-record” defects in title, the insurer will typically require a survey of the property to be insured. Title insurance insures owners of real property, or lenders using real property as collateral, against loss arising out of defective or invalid titles and the existence of other liens or other legal claims against titles to real property.
NYS appellate court reinstates @NYDFS tough title insurance regulations barring unsavory business practices that homeowners pay for when buying or refinancing houses.
Decision here pp. 84-88: https://t.co/q1d9ZznVMw
— HaveCaster (@RussHaven1) January 3, 2020
The Commissioner may provide, by rule, for interim use of premium rate schedules in effect prior to January 1, 2011. In Texas, there is a legal distinction between closing the real estate transaction and closing the title insurance transaction. For the real estate closing, either the parties to the transaction or their attorneys are required. However, in order to close the transaction for title insurance, an attorney or a licensed escrow officer of a licensed title agent or company is authorized. This means that in addition to the risk covered by the title insurance company, the rates also include the title search and examination, as well as closing the title insurance transaction.
Title insurance agents/companies search public records to develop and document the chain of ownership of a property. If any liens or encumbrances are found, the title company might require a home buyer to eliminate them before issuing a title policy. Title insurance agents might also hold money in escrow and perform closing services for an additional fee.
Sometimes, several businesses that offer settlement services are owned or controlled by a common corporate parent. These businesses are known as “affiliates”, while the relationship is called an affiliated business arrangement . This is sometimes called a loan policy and it is issued only to mortgage lenders. Generally speaking, it follows the assignment of the mortgage loan, meaning that the policy benefits the purchaser of the loan if the loan is sold.