Hello, this is Dave at TitleSearch.com and AFX Title, and today we’re unraveling the intricacies between title insurance and a title search. Understanding the distinction between these two elements is crucial for anyone involved in real estate transactions. Let’s dive in!
Title Search: Unveiling Property Information
A title search is essentially a comprehensive information gathering process. It involves meticulous research across various records for a property. This research may include visits to the deed recorder’s office, the tax assessor’s office, the secretary of state, civil court, and probate records in certain regions. Typically, a title search delves into four to five different record sources, resulting in a detailed report on the property’s title status.
Title Insurance: A Shield for Property Owners
On the other hand, title insurance transcends mere information – it is an actual insurance policy designed to safeguard potential property owners from defects in the title. Unlike a title search, title insurance covers issues that may extend beyond what a standard search reveals. This includes scenarios such as forged signatures in the property’s history or hidden liens not evident in real estate records.
Key Differences in Acquisition
When obtaining a title search, you are essentially commissioning a research project conducted by a certified title examiner. In contrast, acquiring title insurance involves a more extensive process. The title insurance company utilizes the results of a title search as part of its underwriting. This process may also involve a survey of the property, inspections, and even a credit report on the current owner to uncover potential financial liabilities.
Reading the Exclusions: Crucial Aspect of Title Insurance
While both a title search and title insurance provide valuable insights, it’s essential to note that a title insurance policy will have exclusions. These exclusions are typically listed in Schedule A, the first page of the insurance policy. Prospective purchasers or lenders should thoroughly read this exclusion list to understand what is covered and what is not under the policy.
Closing Costs and Additional Considerations
The cost difference between a title search and title insurance is notable. A title search typically ranges from $100 to $200, whereas title insurance for an average property in the United States may cost between $1,500 and $2,000. It’s important to be aware that many title insurance companies prefer to handle the closing process, adding an additional $2,000 to $2,500 in typical closing costs.
Choosing the Right Path
For retail purchases, where the goal is a seamless transaction, many clients opt for both title insurance and the closing services provided by the title insurance company. However, for those navigating foreclosure or tax auctions, running an independent title search might be the preferred route.
Seeking Professional Guidance
If you have questions about title searches, title insurance, or the intricacies of your specific situation, feel free to reach out to us at TitleSearch.com. Alternatively, consulting with a qualified real estate attorney can provide valuable insights tailored to your unique circumstances.
Understanding the differences between title searches and title insurance is essential for anyone venturing into real estate transactions. Whether you’re seeking information or safeguarding your investment, being well-informed empowers you to make sound decisions in the dynamic realm of real estate. Explore your options, conduct due diligence, and ensure a smooth journey with the right guidance.