1. What is title insurance?
At the risk of oversimplification, in North Carolina, Title Insurance is a contract of indemnity based on an attorney's opinion of title, rendered after a search of the public records, which indemnifies the insured for covered losses caused by on-record or certain off-record defects.
2.
How much does title
insurance cost?
Title insurance premiums are standardized across the industry and are regulated by the Department of Insurance. The modest premium is paid only once, at closing, and is based on several factors including, but not limited to: the type of policy, purchase price, loan amount, and any applicable reissue
discounts or credits.
3. How long does coverage last?
After payment of the modest one-time premium, coverage lasts as long as the insured has an interest in the property. Generally speaking, for the owner this is as long as he or she owns the property, or is liable under warranties given in a deed. For the lender, coverage generally lasts until the loan is paid in full and the debt is extinguished.
4. What is the difference between and owner's policy and a lender's policy?
An Owner's Policy is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you have an interest in the property. Only an Owner's Policy protects the buyer should a covered title problem arise.
A Lender's policy is required when there is a mortgage on the property. It only protects the lender's interests in the property, should a problem with the title arise. It does not protect the buyer. The policy amount decreases as you pay down your loan and eventually disappears as the loan is paid off.
5. Do I come to your office for my closing?
In North Carolina, title examinations and real estate closings are performed by attorneys. The attorneys certify the title to and obtain insurance from independent title insurance companies. This system allows North Carolina to maintain some of the lowest closing costs in the nation.
6. If an attorney searches my title, why should I have title insurance?
Title insurance is the best evidence of seller’s title. Unfortunately, attorneys or abstractors die, disappear, let their E&O insurance lapse, become insolvent, or have a host of other issues. Also, attorneys or abstractors are only liable for their negligence, and many matters covered by title insurance (i.e. forgery, duress) would not be discoverable during a title exam and therefore would not constitute attorney negligence or malpractice. Title insurance shifts the risk of a title defect/problem from the owner/lender (and attorney) to the insurer.
7. The lender is not requiring a survey. Do I still need to obtain a survey?
This is a personal decision that should be discussed with your attorney, but generally speaking, yes. The lender will have coverage in their policy for matters that would have been disclosed by a survey even if one is not obtained. However, without a survey, the owner's policy specifically excludes coverage for any matter that would have been revealed by a current survey. Surveys can reveal many title issues, including but not limited to, encroachments, boundary line problems, and setback violations.