On this page we answer the most common questions we receive. If your question is not here, please email us
or contact one of our branches
Q. What is Title Insurance?
A. A policy of title insurance is a contract of indemnity between the insurance company and the owner of an interest in real property. The title insurance policy commits the title insurance company to pay the insured policy holder for loss caused by defects of title on real estate in which the insured has an interest, usually as a purchaser/owner or mortgagee. Typically the real property interests insured are fee simple ownership or a mortgage. However, title insurance can be purchased to insure different types of interests in real property including easements, leases and life estates.
There is a significant difference between title insurance and other types of insurance in that title insurance attempts to eliminate risks and losses caused by title problems which stem from events that occurred in the past, rather than insuring against a future event. Title companies attempt to eliminate risks by searching the public records to assess the chain of title to the subject property.
If issues arise during the chain of title assessment, the title insurance company works either to eliminate the issue or offer the insured insurance over the defect, if possible.
In order for a title insurance policy to offer you protection, you must be the named insured on the policy. Typically, a commitment of title insurance will be provided to the customer before a policy is issued. The commitment will detail the name of the insured, amount of coverage, and any items that are excluded from coverage. The title insurance commitment should be thoroughly reviewed before proceeding with the transaction as the commitment will explain to the insured exactly what type of policy and coverages they are purchasing.
Q. Do I really need Title Insurance?
A. Yes. You may think that the chances of having a title issue are rather remote, but title insurance companies know that not to be the case. Title insurance claims are on the rise and it is estimated that 25% of all property searches reveal defects in the chain of title. Having to defend title to your home by a party that claims an interest in your property has the potential to devastate the average homeowner. Imagine purchasing a new home for $290,000. You apply for a mortgage to finance your purchase. You close and move into the new home. Three weeks later you receive a call from a gentleman that claims to be the true owner of the home. He explains to you that he had been renting the home to his nephew while he was in Florida. His nephew forged his signature on a deed and recorded it in the county records. Without the assistance of title insurance, you have now spent $290,000.00 on an investment that has become a total loss for you. Many people insure their automobiles when the average investment is less than $20,000. Doesn’t it make sense to insure the investment in your home?
Q. How can I ensure a smooth real estate closing?
A. (1) Establish a relationship of excellent communication- identify the parties that will be involved in facilitating your transaction and make sure the parties know your expectations and the best way to communicate with you. It is important to remember that many transactions involve multiple parties, such as a mortgage lender, a realtor, a title company and in some instances attorneys. All parties should be kept informed as your transaction progresses to the closing table.
(2) Work with a team of experienced professionals- Bell Title Company has closed thousands of real estate transactions. We have worked with a variety of realtors, lenders, financial advisors and attorneys. We know our market and the professionals operating therein. We can provide you with referrals to a network of professionals that have consistently provided their customers with excellent service.
Q. What is a 1031 Tax-Deferred Exchange?
A 1031 Exchange, when properly structured, allows an investor to sell property and reinvest the proceeds from that sale into a new property and defer all capital gain taxes. Section 1031 of the Internal Revenue Code provides:
"No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment."
To find out if your transaction qualifies for Section 1031 deferral, call our Okemos branch at (517) 381-5353 and ask for a 1031 representative.