How Much Is Title Insurance in North Carolina?

Title insurance provides financial protection for property owners and lenders in real estate transactions. It safeguards against potential financial loss resulting from defects or issues affecting a property’s title. This insurance addresses problems that may have existed in the property’s history before the current purchase, ensuring clear and undisputed ownership.

Understanding Title Insurance Coverage

Title insurance protects against hidden defects that a standard title search might not uncover. These defects can include errors in public records, undiscovered liens from unpaid debts or taxes, fraud, forgery, or invalid deeds. Coverage also extends to claims from undisclosed heirs or undiscovered wills that could challenge ownership. It also addresses boundary or survey disputes and unknown easements or encumbrances that might affect property use.

There are two primary types of policies: owner’s title insurance and lender’s title insurance. An owner’s policy protects the buyer’s equity in the property for as long as they own it, covering the purchase price. A lender’s policy protects the financial institution’s investment, ensuring their loan is secure against title defects. This policy is almost always required by lenders in North Carolina to protect their interests. While an owner’s policy is not legally mandated, it is highly recommended for buyers to safeguard their investment against unforeseen title issues.

Calculating Title Insurance Premiums

The cost of title insurance in North Carolina is primarily determined by the property’s value and is subject to state oversight. The North Carolina Department of Insurance requires all title insurers to file their proposed rates, which then undergo a review and approval process. The approved rates tend to be uniform across different title insurance companies.

For an owner’s policy, the premium is calculated based on the property’s purchase price. The premium for a lender’s policy is based on the loan amount. Rates are typically structured on a “per thousand” basis, where the rate per thousand dollars of coverage may decrease as the property or loan value increases. A minimum premium of around $51.00 applies regardless of the property value.

Buyers can often benefit from specific discounts, such as a reissue rate, also known as a prior owner discount. This discount applies if a previous title policy was issued on the same property within the last fifteen years. Under a reissue rate, the premium can be reduced to 50% of the regular rate for the amount of the prior policy. To qualify for this discount, documentation of the prior policy, such as a HUD-1 settlement statement, must be provided.

Additional coverage, known as endorsements, can be added to a title insurance policy to address specific risks or provide expanded protection. These endorsements incur extra costs and contribute to the overall premium. When both an owner’s policy and a lender’s policy are issued simultaneously for the same transaction, a simultaneous issue rate may apply, often resulting in a reduced combined cost for the lender’s policy.

Associated Fees and Payment Responsibilities

Beyond the title insurance premiums, other fees are involved in the title process in North Carolina. A licensed attorney must conduct a thorough title search and provide a title opinion before any title insurance policy can be issued. These attorney fees cover the legal work involved in examining public records for deeds, mortgages, judgments, and other potential issues, and are separate from the title insurance premium itself.

Attorneys in North Carolina also typically handle the closing process, including the disbursement of funds. Other general closing costs, while distinct from title insurance premiums, are part of the overall transaction expenses. These can include recording fees for officially documenting the transfer of ownership and other administrative charges. Recording fees typically cost less than $100.

Regarding payment responsibilities, the customary practice in North Carolina is for the seller to pay for the owner’s title insurance policy. Conversely, the buyer typically pays for the lender’s title insurance policy, especially when financing is involved. While these are common practices, the allocation of these costs can be negotiated between the buyer and seller and formalized within the purchase agreement.