FAQs/ Title Insurance
What is title?
A title is the foundation of property ownership. It is evidence of the owner’s right to possess and use the property.
What is title insurance?
There are two main types of title insurance policies: lender’s and owner’s title insurance. A lender’s policy is distinct from an owner’s policy and protects only the lender’s financial interest in the property. If you’re taking out a mortgage, the lender will typically require this type of coverage.
An owner’s policy, on the other hand, safeguards your ownership rights and protects against losses due to issues such as undiscovered title defects or “hidden hazards.” Enhanced owner’s coverage goes a step further by including protection for zoning and subdivision violations, building permit problems, and encroachment disputes. It also covers certain post-policy risks like identity theft, forgery, and neighbor encroachment.
Additionally, enhanced coverage includes legal defense and coverage for losses or liabilities that may arise. It even adjusts to increases in your property’s value—offering up to 150% of the original policy amount over time.
What does a title company do?
The role of a title company like Gold Star Title Company starts well before the settlement day. We gather essential information from various sources, including land and court records, as well as the buyer’s and seller’s mortgage companies. Our team coordinates closely with all parties involved to ensure a smooth process.
We identify and resolve any potential issues in the transaction, such as judgments or liens, before the closing occurs. At the settlement table, we handle the collection and distribution of funds, facilitate the official transfer of property ownership, and issue title insurance.
After settlement, Gold Star Title Company is responsible for recording the Deed and Deed of Trust in the land records. We also ensure that the seller’s mortgage is properly released and documented.
What kinds of problems can a title search reveal?
A title search can uncover various title defects, liens, encumbrances, or restrictions that may affect the property. These can include unpaid property taxes, outstanding mortgages, legal judgments against current or previous owners, and restrictions that limit how the land can be used.
How much does title insurance cost?
The cost of title insurance is likely less than you think. While fees can vary, title insurance—including the title search, examination, and related services—typically amounts to about 1% or less of the property’s purchase price.
Unlike other types of insurance that require annual premiums, title insurance is a one-time payment made at closing. In Maryland, rates are regulated by the Maryland Insurance Commission.
If the sellers have an existing owner’s title policy, buyers may even qualify for a reissue rate, which can lower the cost further.
How long does my coverage last?
Title insurance coverage lasts for as long as you or your heirs have an ownership interest in the property—and in some cases, even beyond that.