In general, the title insurance company pays for coverage of liability to a real estate developer for bodily injury and damages incurred because of the use or occupancy of a completed project. Title insurance in Boca Raton FL is only purchased after the property has been developed and construction completed.
The need for title insurance has grown recently in the housing market due to adverse economic conditions causing property owners to come up short on cash flow. As a result, borrowers are now seeking out new funding sources from third-party investors. Here are some of the benefits of title insurance:
Without title insurance, a lender can be held liable if a builder misses a payment. In addition, the lender will have to cover any unpaid interest and fees owed on the loan. Because of this, lenders have looked to other forms of security, such as letters of credit (which must be cashed), to minimize the loss.
The market value of most homes increases as they are occupied, so it is frequently essential to document who has the property after closing. There is no way to be sure without title insurance since everyone can get ahold of the lender and obtain a mortgage. Additionally, many investors do not want to hold properties for long periods without title insurance. They will want to sell them soon after closing to avoid risk.
If a home sells for more than the builder provided, the insurance company will cover any additional profit earned. If a house were under-built, then title insurance would cover the shortfall. Additionally, title insurance will cover any difference if a buyer pays some of the closing costs but not all of them. It will occur if it is revealed that there are non-existing conditions in the home, such as substandard appliances or mechanical problems.
Title insurance covers the abstract rights of the property owner, including the liability to third parties and the ability to transfer property. It means that you will not be liable for any unpaid mortgage payments or other loan obligations. You will also have the right to transfer title. For example, if a buyer decides he does not want to hold a particular home, he would be able to get out of that obligation with less effort than he would otherwise have.
In addition to the risks of under-construction homes and non-existing mortgages, other market aspects could present problems. For example, there have been cases where developers had completed homes in areas supposed to be flood zones. Depending upon the zoning laws, the developer could be held liable for any damage caused by flooding. Title insurance would protect these builders from those potential claims by giving them coverage for flood damage due to a construction defect.
Although the benefits of title insurance are straightforward, only a few states mandate its procurement. Real estate developers who live in areas that do not require title insurance can still obtain it. Title insurance in Boca Raton can be purchased from several different companies. By finding the best title insurance companies that offer the high-value title insurance coverage your business needs, you can protect yourself from any potential problems you may encounter after closing. To learn more about title insurance, contact Expert Title.