To fully serve our clients in the purchase and financing of real property, the Firm is an Agent of Stewart Title Insurance Company and First American Title Insurance Company. As an Agent with these title companies, the Firm is able to issue title insurance policies for the benefit of owners and lenders. As the client, it is your choice whether you wish the Firm to issue the title insurance on your behalf, or if you wish the Firm to obtain title insurance on your behalf from an unaffiliated title company.
What is Title Insurance? Title insurance is a form of insurance that was first sold in the United States in 1867 to protect property owners and mortgagees against loss through unknown adverse claims or hidden interests in their properties. Even the most thorough and competent title examination cannot protect against loss from hidden title defects. While fire and liability insurance protects against future acts or incidents, title insurance protects against pre-existing title defects. Unlike homeowners insurance which requires payment of a premium every year, a title insurance premium is paid only once, at the time of closing.
Title Insurance Required by Mortgage Lenders. Your mortgage commitment will require that the mortgage lien on the property be insured by a Mortgage Title Insurance Policy (“Mortgage Policy"). The Mortgage Policy protects only the lender's interest. The premium for the Mortgage Policy will be charged to you as a closing expense by your lender. During your mortgage application, or as part of your acceptance of the mortgage commitment, you may be given the choice of either having the lender obtain the Mortgage Policy on your behalf, or obtaining it yourself. If you are given the option, we recommend that you allow us to complete the appropriate title work necessary to obtain the policy. If given the opportunity, we will prepare the preliminary title report, forward the material to the bank's attorney and request a closing date.
Title Insurance to Protect You. We recommend that you obtain an Owner's Title Insurance Policy (“Owner's Policy") to insure your ownership interest in the property. In evaluating the worth of an owner's title policy, please keep the following in mind. First, the Mortgage Policy only insures the bank against title defects, and does not provide any coverage to you. Second, by obtaining an Owner's Policy at the same time as a Mortgage Policy, the premium for the Mortgage Policy will be automatically reduced by seventy percent (70%). If you accept our recommendation and purchase an Owner's Policy, we will prepare the title insurance commitment to insure your interest as well as the lender's mortgage. The additional premium for the Owner's Policy will be added to your closing costs. If you elect not to obtain an Owner's Policy, we are not able to provide you with an opinion of title.
Fair Market Value Rider. If you purchase an Owner's Policy, you have the option to obtain a Fair Market Value Rider (“Rider"). The Rider provides the added benefit of effectively increasing the face amount of the policy as the fair market value of your home increases due to inflation. This Rider is extremely beneficial if you believe significant appreciation will be realized during your period of ownership. Please note the Rider does not increase coverage for a rise in value resulting from renovations, capital improvements or remodeling completed by you during your period of ownership. If you are currently planning a major renovation or remodeling of your new home, please call to discuss your plans. You may also increase your coverage at a later time, by payment of an additional premium. If you elect to include the Fair Market Value Rider in your policy, an additional premium for the Rider will be due. We will discuss the Fair Market Value option with you at the time of closing. If you do not want the Fair Market Value Rider, at the time of closing, you will be asked to sign a waiver of that option.
Costs and Fees of Title Insurance. Title insurance premiums are regulated by the New York State Insurance Department and are uniform among the various title insurance companies. The premiums will be included in the closing cost information which we provide to you prior to closing. In addition to providing legal services to you, we will also provide additional and separate services to the title insurance company issuing the Mortgage Policy to your lender, and, if you have so elected, the Owner's Policy insuring your ownership interest. On behalf of the title insurance company, we will act as agent to review the title, prepare a preliminary title commitment, mark up the title commitment at closing, collect the required curative documents, and issue the final policy(ies) after closing. For these services, we will receive a portion of the total title insurance premium that you will pay. The title insurance premium that you will pay will be the same whether or not we act as an agent for the title company. If we do not act as agent because your mortgage lender directs the work to another firm or title company, our legal fee for representing you in this matter may be increased based on the title work we perform on your behalf.
For informational purposes, the following website contains a title insurance rate calculator:
We urge our clients to review with us all questions they may have regarding title insurance and premiums charged for the coverage.
Our representation of you in this matter is governed by the Lawyer's Code of Professional Responsibility. Of primary importance to us is that our representation of you be based on a duty of undivided loyalty and zealous representation. In the unlikely event a title problem arises that would create a conflict between yourself and the title insurance company, we will discontinue our role as agent for the title company, and an unaffiliated title company will be engaged to issue the title insurance. You may also request that the title insurance be obtained by us from an unaffiliated title insurance company. Additionally, the Lawyer's Code of Professional Responsibility prohibits us from being compensated twice for the same services. Accordingly, we will bill the title company for all title services and not duplicate any billing of title services to you. If you have questions regarding this title insurance disclosure, please call us, or another independent attorney.