Who Pays for Title Insurance in Florida?

Title insurance plays a significant role in real estate transactions, providing protection against unforeseen issues that could affect property ownership. This insurance helps ensure a clear title, which is the legal right to possess and use a property. Understanding the nuances of title insurance is important for anyone involved in buying or selling real estate.

What Title Insurance Covers

Title insurance safeguards against financial loss stemming from defects in a property’s title that existed prior to the policy’s effective date. Unlike other insurance types, it involves a one-time premium paid at closing, and the coverage remains in effect for as long as the policyholder or their heirs own the property. This protection extends to various risks, including errors or omissions in public records, undisclosed liens, or claims from other parties.

There are two types of title insurance: an Owner’s Policy and a Lender’s Policy. An Owner’s Policy protects the buyer’s equity and ownership rights. It covers issues like forged documents, errors in records, undisclosed heirs, or ownership claims. A Lender’s Policy protects the mortgage lender, securing their investment against title defects. Most lenders require this policy as it protects their security interest.

Paying for Owner’s Title Insurance in Florida

In Florida, the customary practice for paying the Owner’s Title Insurance policy differs from other states. Sellers traditionally cover the cost of the owner’s policy in many Florida counties. This custom assures the buyer that the title is free from defects, reinforcing the warranty deed.

This practice is a custom, not a legal mandate, and is negotiable between the buyer and seller. In some counties, like Broward, Collier, Miami-Dade, and Sarasota, buyers commonly pay for the owner’s policy. Regardless of local custom, payment responsibility can be adjusted as part of the purchase agreement. The party paying for the owner’s title insurance generally has the right to choose the title company.

Paying for Lender’s Title Insurance and Other Fees

When a Florida property purchase involves financing, the buyer is almost always responsible for paying the Lender’s Title Insurance policy. This policy is a mandatory requirement for most mortgage lenders, protecting their financial interest up to the loan amount. The cost of this policy is typically lower when issued simultaneously with an Owner’s Policy.

Beyond the title insurance premiums, buyers and sellers in Florida also encounter other title-related closing costs. These can include title search fees, which range from approximately $75 to $350, depending on the complexity of the search. Settlement or closing fees, which cover the administrative costs of finalizing the transaction, typically range from $300 to $500. Recording fees, incurred when documents like the deed and mortgage are officially registered with the county, are also common. These fees, along with documentary stamp taxes, are part of the overall closing costs that are shared between buyers and sellers, though specific allocations can be negotiated.

Negotiating and Disclosing Title Insurance Costs

The allocation of title insurance costs, particularly for the owner’s policy, is negotiable in Florida real estate transactions. Buyers and sellers can discuss and agree upon who pays these fees as part of the purchase contract. This flexibility allows parties to integrate title insurance expenses into their negotiation strategy.

Title insurance premiums in Florida are regulated by the state’s Office of Insurance Regulation. The rates are based on the property’s purchase price, with a tiered structure. For example, the rate is $5.75 per thousand for the first $100,000 of coverage and $5.00 per thousand for amounts between $100,000 and $1 million. All title insurance premiums and related fees are itemized on the Closing Disclosure (CD), provided to buyers and sellers before closing. This ensures transparency regarding all transaction costs.