Understanding Title Insurance Before You Begin the Escrow Process

As you prepare to buy your dream home, it’s critical to ensure that your rights to the property will be unchallenged in the future. Although the closing agent is tasked with reviewing public records to confirm the title’s marketability, errors can still occur. This highlights the importance of understanding title insurance.

An experienced closing agent, often an escrow officer, will meticulously search for any defects in the title. These defects could include unpaid mortgages, judgments, liens, fraudulent deeds, or clerical errors in public records. Despite their expertise, certain “hidden defects” might go unnoticed, and that’s where title insurance comes into play. Remarkably, you only need to pay for title insurance once, yet it protects you for as long as you own the property.

Understanding Marketable Title

A marketable title is one free from any discernible defects, allowing the property to be transferred to you, the buyer, without issues related to the title.

Common Title Insurance Policies

There are various title insurance policies, with the Lender’s Title Policy and the Owner’s Title Policy being the most prevalent.

– Lender’s Title Policy: Safeguards your lender against losses up to the loan amount.

– Owner’s Title Policy: Provides coverage up to the purchase price of your home, protecting you as the property owner.

Payment of title insurance premiums often depends on local practices; however, both sellers and buyers can negotiate who pays these costs. In Arizona, it’s typical for buyers to select the title company and the escrow agent, with escrow fees generally divided equally between the buyer and the seller. The buyer usually covers the lender’s title policy, while the seller often pays for the owner’s title policy.

Pro Tip: Consult your real estate agent about potential discounts on title insurance under various circumstances. Your agent can also assist in negotiating the payment responsibilities for these costs, based on the current market conditions and other factors.

Selecting the Right Title Company and Escrow Agent

Ask your real estate agent: A top-notch agent will have a reliable escrow agent as part of their team, ensuring a smoother transaction. If problems arise, they are well-equipped to manage them effectively.

If you’re not working with a real estate agent, consult your loan officer, especially if you’re considering refinancing your existing home. A competent loan officer will have established relationships with preferred escrow agents.

The Importance of Experience

Having worked for over quite some time in Dallas’ real estate market, I’ve experienced hundreds of transactions involving various title companies and escrow agents. It’s crucial to work with seasoned professionals to avoid issues, such as delayed closings due to unprepared files.

If you have any questions or need recommendations for a reputable title or escrow officer in Tucson or surrounding areas, don’t hesitate to reach out.

Have a fantastic day,

Kellan Hickman