Title Companies - The Most Common Business in Florida Real Estate Transactions

​What’s the most common business in Florida real estate transactions?  Is it:

• LENDERS
• REALTORS
• TITLE INSURANCE COMPANIES

If you guessed Title Insurance Companies—​congratulations, you're correct!  (and yes, the title of the post kinda gave away the answer)

A Title Insurance Company is a business that’s at the very center of ​nearly ​every single real estate transaction, ​whether it's a For-Sale-By-Owner transaction without Realtors, or even ​whether ​it's a cash transaction with no mortgage financing.​  

A title law firm i​s a similar type of business, where an attorney (or attorneys) operate the business and offer legal advice to their clients directly.  Title Insurance Companies also have attorneys, sometimes on-premises and sometimes off-site, depending on the business.  

Certain states, such as New York and Georgia for instance, are considered "attorney states", where the majority of real estate transactions are done through title law firms exclusively.  Here in the state of Florida, the vast majority of transactions are performed by Title Insurance Companies.​

A Title​ Insurance​ Company plays 3 major roles in the ​real estate ​transaction:

• N​EUTRAL PARTY – They represent BOTH the Buyer and the Seller and they provide a place with licensed notaries to help buyers and sellers sign their official closing documents.​  ​They also collect certain taxes and record documents and record documents into public records. 
• FINANCIAL NEXUS – The Title Insurance Company has a serious financial responsibility in the transaction too. They collect all of the funds in the transaction, including buyer’s initial earnest money deposit check, the buyer’s down payment and closing funds, and even the lender’s wire for the new loan.  Once the transactions is funded, the title company then disburses checks to the appropriate involved parties in the transaction—such as the seller’s cash proceeds, loan payoffs to the seller’s old lender, any unpaid liens, Real estate commissions, survey costs, homeowners insurance premiums and more.
• TITLE INSURANCE – The title company offers title insurance for both the lender and the homeowner. Title insurance protects against unknown or undiscovered liens against the property.  They perform legal ​research on the property, looking for any legal claims made against the ​home.  

For instance, let’s say that you’re buying a home, and the previous owner had a contractor lien for $25,000 for an unpaid roof​ that showed up after you bought the home​.  If the title company didn’t catch this lien during their legal search, then the title ​insurance ​policy would pay for this lien instead of you!

WRAPPING UP...

As always, if you’re looking to purchase, refinance or get preapproved to purchase a home anywhere in the state of Florida, we’d love to help.  Simply give us a call so we run some numbers for you and answer all your questions! 

You can also drop us a line HERE »

Yours in successful homeownership,

Derek Bissen
Loan Originator
NMLS#365627
Unconventional Lending Program Director