“We are responding to the March 20 article, “Are Title Rates Fair?”
The experts in the industry firmly believe that current rates are fair and reasonable, and fully expect that the upcoming data call will provide the factual basis to support that conclusion. Comparing loss ratios with casualty carriers totally misses the mark. The title industry spends a significant portion of its one-time premium to eliminate problems up front in order to meet consumer needs and expectations. Consider that expense as “prepaid claims.” When you add those costs into actual paid losses, the loss ratios for the title industry are roughly comparable to those quoted for casualty carriers.
The closing statement in the article was grossly out of date. The current federally required form was designed to promote consumer shopping and Florida law (changed at the urging of the insurers) forbids many of the fees set out in that example. Since this federal regulatory change was made, fees for the whole bundle of products and services, being search, exam, determining insurability, escrow and insurance, are not out of line with the rest of the Southeast.
The Florida Land Title Association (FLTA) promoted legislation this year authorizing the collection of the data necessary for OIR to set a fair and reasonable rate. That bill has passed the Florida Legislature and awaits signature by the Governor.
FLTA members are proud of their significant work during this difficult real estate market to deliver peace of mind to Florida homebuyers, and we encourage consumers to do business with members of the Florida Land Title Association.”
Whenever I read articles about title insurance in the newspaper it saddens me to see how off-base they tend to be; the recent front-page story in the Palm Beach Post was no exception.
I’ve been examining titles & closing real estate transactions in Florida for over 28-yrs, followed in the footsteps of my father and grandfather, who (in the mid-70’s along with the aid of a handful of other dedicated professionals) wrote the 1st teaching manual used in Florida [“Florida Land Titles”] portions of which are still required reading today.
In the briefest sense, the primary duty of the title industry is to protect the American Dream of homeownership. Title Insurance covers that –
To those who are currently in our profession that do not share that same principle and look at the industry as merely a job for money, I respectfully request you ‘exit stage right’ – your services are not required.
The story reads, “Consumer advocates say (title insurance) is a rotten deal for Floridians”. My response is, there’s much more to title insurance than meets the eye, and that I won’t address all aspects here but I shall try to clarify a few misconceptions.
Cost of actual Title Insurance. Where else can one secure attorney representation (should it ever be needed) for the price of a one-time title premium? Retain an attorney lately, it's $5,000 before most will even consider your case. The cost for a title premium on a $100,000 home is $575, or lower if discounts apply. Title Insurance covers that –
Representation aside, in a worst case scenario you lose your home (thankfully that rarely occurs) but should that happen, the homebuyer’s investment is protected. Title Insurance covers that –
Search a title lately? I have, about 30,000 or so. Think it’s easy? It’s not terribly difficult to find information but be prepared to outthink every person who’s ever prepared a legal instrument or who index one. Technology aside, both are performed by fallible humans. Title Insurance covers that –
Some think technology (applying to title insurance) has solved all the world’s problems. Granted they’re many advantages, no doubt, but with it also come setbacks. There’s typically much more to a title search these days than ever before; there’s far more activity by more people with similar names, more liens, easements, restrictions and litigation, not to mention the F-word, yes I’ll say it, Foreclosures. Title Insurance covers that –
Finding ALL of the information (volumes of which can vary wildly) relative to the history of a piece of real estate is only one part of the trick. Now it must be read and interpreted to determine how it affects the land; does it need to be corrected or clarified, will it hold up in court, does it create a lien, is it a restriction, is it an easement right over the land? Title Insurance covers that –
Highly skilled title examiners are scouring ALL OF THIS behind the scenes before you get to the closing table. Why? So that after you close no one comes knocking on your door with their hand out asking you for the keys, or for a check or to inform you they’re about to plow through your backyard. Think it hasn’t happened, it has; and when it has, it’s not our finest hour but you know what? Title Insurance covers that –
The story reads, “Buyers have no idea they have a right to choose a title agent”. Not necessarily true! Not if they’re attempting to buy a home from a national lender (REO sale) the lender [or its Loan Servicing Company / Asset Management Company] will insist (most every time) that the homebuyer has to use their title company, they usually won’t even consider your offer otherwise.
So what’s their motivation? Simple, there’s no money in it otherwise. Sure, they’ll pay for your Owner’s Policy, nice guys that they are (that’s the hook they use to leverage a Buyer to their title company) but when the Buyer gets that final HUD-1, watch out! – THIS is where a Buyer is apt to be taken advantage of.
The scenario in most REO sales leaves a homebuyer stuck with a title insurance company not of their choosing and having their closing handled through the mail by faceless names who they’ll never meet. The added bonus (in many cases) is they’ll wind up paying more for the privilege than if they had chosen their own title company and had paid for all the title and closing costs themselves.
It’s important to remember; title insurance deals with dirt, dirt in a given jurisdiction subject to local customs and it should always be investigated and closed by those who have knowledge of that dirt and customs in the given jurisdiction.
The typical traditional title agent in your community is not the problem with title insurance, the culprits (in my humble opinion) are controlled business arrangements, a/k/a affiliated business arrangements [fancy term for (deferred) legalized kickbacks] which are thriving at the expense of good service and increased costs to consumers. Their primary motivation is money first, with profession and service second, bass-ackwards.
In closing, to our regulators and legislators I say, regulate the aforementioned and by all means please do a data call ASAP, I cannot afford to go further into debt for the privilege of plying my trade & protecting the America Dream ––
PS: only scratched the surface
R.F “Bob” Booth, Jr., C.L.S.
Community Land Title Corp
Email: Executive Director, Scott MerrittEmail: Executive Assistant, Jena Daly
Florida Land Title Association is a 501(c)6 non-profit organization.
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Mailing Address:Florida Land Title AssociationP.O. Box 66145St. Pete Beach, FL 33736