Frequently asked questions

A title insurance policy protects the insured against any loss suffered as a result of the title to land not being as insured in the policy. For a one-time premium, the title policy provides protection as long as the buyer owns the property.

Unlike other kinds of insurance, title insurance insures against past events affecting the rights to real property, rather than unforeseen future events.

Title insurance is recommended on any home, no matter how new or apparently secure. The land has undoubtedly had many previous owners, and claims against any one of them can be filed against the property — and against you as the present owner. Hazards such as fraud, missing heirs, old liens and many others can, and sometimes do, arise like ghosts out of the past.

Title insurance protects you against these claims and title defects. Your policy is your shield of protection and will defend your ownership against loss as outlined by the policy. Your protection and peace of mind last as long as you and your heirs remain in ownership.

Unlike the annual premiums of most other forms of insurance, you pay a one-time premium for title insurance. The premium depends on the type of coverage you and/or your lender request.

There are two basic types of title insurance policies: an Owner’s Policy and a Lender’s Policy.

Owner’s Policy: Owner’s title insurance is generally issued for the amount of the purchase price. It protects the purchaser and the purchaser’s heirs as long as they own the property, protecting the owner from unknown risks to the ownership interest.

Lender’s Policy: Most lenders require title insurance as security for their investment in the property. The borrower typically pays for the Lender’s Policy, which is issued for the loan amount. It covers the mortgagee for up to the full value of the loan policy if the lender suffers a loss, including its ability to foreclose and recover its principal and interest. It ensures that the lender’s mortgage is in first position (unless the mortgage is meant to be a junior lien).

If both an owner’s and a lender’s policy are issued, a simultaneous issue rate applies.

If the seller has an Owner’s Policy from an Ohio-licensed title insurer that is less than 10 years old, the buyer’s new Owner’s Policy may qualify for a reissue rate of 70% of the standard rate. The discount applies only up to the amount of the prior policy; any coverage above that amount is charged at the standard rate.

A similar discount applies to a refinance. When the same borrower refinances the same property and the original loan policy is 10 years old or less, the new lender’s policy is charged 70% of the standard rate on the unpaid balance of the original loan, with any new money charged at the standard rate.

To qualify, we need a copy of the prior policy or enough information to identify it, so please send us your previous owner’s or loan policy if you have it. Exact rates and minimum premiums come from the title insurer’s filed Ohio rate manual — ask us for a quote for your transaction.

A title search is a means of determining that the person who is selling the property really has the right to sell it, and that the buyer is getting all the rights to the property that he or she is paying for. It includes a chain of title, tax search and judgment search.

After the title search, the title company issues a commitment to insure, stating the conditions under which it will insure the title. It is good for six months.

The title commitment will include the amount to be insured (generally the purchase price for an owner’s policy and the loan amount for a lender’s policy), who currently has title, who will be the insured and what interest they will hold, a description of the property, and the exceptions.

Schedule B-I lists what needs to be done to issue the policy, and Schedule B-II lists the exceptions to the title policy (including standard exceptions), which will remain if not removed before the policy is issued. You and your attorney should carefully review the list of exceptions.

An endorsement is an addition to or limitation of title insurance coverage. Endorsements can be a way of dealing with matters where removal of an exception is not possible. Pricing varies and is usually related to the amount of insurance issued.

Ohio law mandates that closing protection coverage be offered to all parties in a closing transaction: the seller, the buyer and the lender. For a nominal cost, you may elect to buy closing protection coverage for yourself. The insurance underwriter provides this protection in case the closing agent steals the closing funds or fails to follow closing instructions provided by the parties.

Your purchase of title insurance alone does not protect you against those actions, and you may want to buy closing protection coverage before you hand over funds to the closing agent.

Ohio closings occur either in escrow or at a round table meeting. In an escrow closing, the closing agent collects all closing funds and documents from the parties. Following verification of all funds and documents and any other closing instructions the parties provide, the agent disburses the funds according to the settlement statement, records all relevant documents at the county courthouse and releases all other documents.

In a round table closing, the parties sit down together to sign documents and exchange funds. Funds are delivered to the seller at the end of the closing, and purchase documents are recorded and released after the funds have been disbursed. Local custom usually determines the closing format.

Whether you are involved in an escrow closing or a round table closing, all parties should ask to see the settlement statement, proposed deed, title commitment and all other closing documents before closing. At the closing, be sure all papers are checked to make sure that the intent of the parties has been carried out.

A purchase agreement is a document that is just as important as the deed itself. It should contain an accurate description of the property and all of the terms of the sale, including the price, the terms of payment, the type of deed to be given, the date of possession, provisions for the furnishing of title evidence, proration of real estate taxes and casualty losses, and matters on which the buyer may want to make the purchase contingent, such as financing, inspections or the sale of an existing residence. In many cases, provisions for items of personal property or fixtures may be needed.

To be enforceable, a purchase agreement must be in writing and must be signed by both the seller and buyer and, if the seller is married, by the seller’s spouse. The seller’s spouse has an interest in the property (known as dower rights) that cannot be taken away without consent.

Under Ohio’s residential disclosure laws, the seller of a home, except in limited circumstances, must disclose to prospective buyers certain information concerning the condition of the home on a form prescribed by Ohio’s Department of Commerce, known as the Residential Property Disclosure Form. The form must be signed by the seller, and the buyer must acknowledge receipt of it.

The seller’s disclosure is limited to conditions known to the seller and is not a substitute for a professional inspection of the home.

Home purchase financing options vary depending on your income, savings, credit record and life situation. Conventional mortgages frequently offer an attractive mix of being low risk and having low interest rates and lender fees. The federal government regulates interest rates, fees and costs, and borrower eligibility for conventional mortgage loans under “qualified mortgage” rules.

If you don’t qualify for a conventional mortgage due to past credit challenges, including bankruptcy or foreclosure, you may qualify for a Federal Housing Administration (FHA) loan. An FHA loan is generally offered at regular market interest rates but allows you to buy a home with a down payment of only about 3.5 percent.

An FHA-regulated appraisal and inspection are required, which are typically more in-depth than conventional mortgage appraisals and inspections. FHA mortgages include a required FHA mortgage insurance premium, usually included in the original loan; these premiums usually cost less than private mortgage insurance.

First-time homebuyers may be eligible for one or more programs offered by the Ohio Housing Finance Agency (ohiohome.org), and veterans may be eligible for VA loans through the U.S. Department of Veterans Affairs (va.gov).

Title insurers examine the public records looking for matters affecting the title to the real property. These records can include, among other things:

• Deeds
• Civil and probate court records
• Easements
• Maintenance agreements
• Assessments
• Debts and other burdens
• Restrictions on the property

An important part of the title insurance process is eliminating risk prior to insuring, thereby reducing the possibility of claim or loss. However, even the most careful examination cannot disclose “hidden hazards” to title.

Hidden hazards can emerge after a real estate purchase is completed, creating an unpleasant and sometimes costly surprise. Some examples:

• Forged deeds, releases or wills
• Undisclosed heirs claiming an interest in the property
• Documents executed under an expired or fabricated power of attorney
• Mistakes made in the public record
• Deeds executed by persons of unsound mind
• Gaps in the “chain of title”
• Invalid divorces
• Fraud

While many of these hidden hazards might not be revealed by a routine title examination, they may be covered under the terms of a title insurance policy. Community Title Group, Ltd. will defend the insured owner against an attack on their title and cover the cost of any settlement, up to the amount of the policy.