First... a video!
Here is a brief and humorous overview of what title insurance truly is:
What is title insurance?
Title insurance is a very unique product. Most insurance is issued on a casualty basis, which means that the insurance company knows the likelihood of something bad happening and prices their policy accordingly. Basically, the insurance company is just taking on your risk that something bad happens. Title insurance does that, too, but that is only a small portion of the title company role. The far larger part is loss prevention. We conduct an investigation of the history of title to property to find out who has ownership, liens, restrictions, easements, or other interests in the property. We then issue a commitment for title insurance, which gives you an outline of what needs to happen to close on the property. By following the requirements of the commitment we can minimize the claims that anyone can make against the title to your property. We can't make every problem disappear, because we can't always discover forgeries and fraud, but that's where the insurance part, the risk assumption, comes in to protect you.
Do I need title insurance?
You are not required to have title insurance to protect yourself. If you are borrowing money from a lender, they will probably require that you purchase title insurance for the lender to protect their mortgage interest. The lender's policy does not provide any insurance protection for you as the property owner, though. If you're like most people, your home is the largest single investment you'll ever make. You should protect yourself when purchasing a home or other real estate by requiring that the seller provide you with a title insurance policy. If the seller is unwilling to do so, it should certainly be reason to question whether the seller is truly the owner of the property.
Who picks the title company?
Traditionally the seller is providing a title insurance policy for the buyer, so the seller will pick the title company that will handle their side of the transaction. As a matter of convenience, then, the buyer might also use the same company to issue the title policy for the lender. With that being said, read on...
There is some value in tradition, but we believe that there is also value in looking out for yourself. Often the seller's agent will select a company based on factors other than the seller's best interest, so it might well be beneficial for the seller to check out pricing and services and direct their agent where the title-work should be placed. Similarly, the seller's title company may provide a great deal for the seller by charging the buyer significantly higher fees. There is no requirement that the buyer use the seller's company (federal law prohibits the seller from requiring it) and it often is in the buyer's interest to comparison shop the seller's company with others in the local market. There may be some confusion that arises by having two title companies involved, but that should be an issue for the title companies to resolve, not the buyer and seller.
What is this going to cost me?
Who bears which costs of the transaction should be spelled out in the sales contract between the parties. If you would like to give us a call (419.633.0261) we can give you a pretty close estimate based on your actual transaction. If you want to run some calculations on your own, though, you can assume that normally the costs are itemized as follows:
- real estate commission (check your listing agreement)
- transfer tax ($4.00 per $1,000 of sales price in Ohio)
- title insurance premium for the owner's policy
- preparation costs for closing package and legal documents (generally $100 to $150 if we are preparing)
- title search (normally $100)
- mortgage, tax and lien payoffs
- costs to correct title issues, if any.
- pro-rated real estate taxes (generally given as a credit to the buyer at closing).
- all lender fees
- closing fee (our fee is normally $100-$150 for sale with new mortgage)
- title examination fee (our standard fee is $100/parcel)
- recording fees (these are nominal, $28 for the first page of each document and $8 for each subsequent page in Ohio)
The title premiums are based on filed rate schedules and are generally similar. Please follow this link to calculate title insurance premiums: http://www.oldrepublictitle.com/newnational/resources/locations.asp
Do I need professional help or can I do this myself?
Yes. You would probably benefit from professional assistance and you might be able to handle it on your own. A real estate agent can bring market knowledge and experience to work for you. And sometimes trying to negotiate directly with the other party to the transaction can lead to hurt feelings, anger, or a dead transaction. A title industry professional can help review and resolve issues before they become large problems. Our ultimate goal is that you have a smooth transaction and professional assistance may make that easier. If you want to try it on your own, we'll do what we can to help. We do act as a neutral third party, though, so we won't take sides and we don't give legal advice.
When can we close and how long will this take?
Your sales contract should determine when the transaction can close, but there are a lot of parties and factors that go into the getting the final closing date and time set. Usually both the buyer and seller want to be at the closing, so they need to be available (we can always make arrangements to work around this if it won't be possible). The lender needs to be able to complete the loan approval process and get the loan documents and funds to us. We need to obtain payoff information on mortgages, taxes, and association dues. If there are unanticipated title problems we need to work on resolving them.
Once the closing date and time are set, we'll get busy with final closing documents. We distribute them for everyone to review prior to closing so we can answer any questions or fix any problems before closing. We'll also provide you with a list of items you'll need to bring to closing. The closing should be the easiest part of the transaction because ideally all of the problems and issues will have been resolved before the parties arrive. The closing itself should take less than an hour.
Are you affiliated with any lender or realty firm?
No. We are a completely independent and locally owned title agency. This allows us the ability to offer you an unbiased pricing structure and to act as a neutral intermediary.