Orlando Harmon
Title insurance in Florida is calculated based on promulgated rates set by the Florida Department of Financial Services in conjunction with title underwriters in the state. The rates vary depending on the liability amount and the type of policy (Owner's or Lender's). In some Florida counties, such as Sarasota, Collier, Miami-Dade, and Broward, the buyer typically pays for their own Owner's Title Insurance Policy, while in other counties, the seller usually covers this cost. When purchasing a property, it's essential to understand the associated costs, including title insurance, which protects the owner's and lender's interests in the property.
| Characteristics | Values |
|---|---|
| Title insurance premium calculation | $5.75 per thousand dollars up to $100,000 of liability |
| Title insurance premium calculation | An additional $5.00 per thousand dollars between $100,000 to $1,000,000 of liability |
| Title insurance premium calculation | An additional $2.50 per thousand dollars between $1,000,000 to $5,000,000 of liability |
| Title insurance premium calculation | An additional $2.25 per thousand dollars between $5,000,000 to $10,000,000 of liability |
| Lender's Policy issued with an Owner's Policy | $25 up to the liability level of the Owner's Policy |
| Purchase of $250,000 property in Florida with 20% down payment ($50,000) | The cost of a Florida title insurance owner's policy and lender's policy are $1,325 and $25 respectively |
| Buyer-paid counties in Florida | Sarasota, Collier, Miami-Dade and Broward |
| Seller-paid counties in Florida | All other counties except Sarasota, Collier, Miami-Dade and Broward |
| Florida Owner's Title Insurance Policy | Optional purchase with significant discounts when bought with a Lender's Title Insurance Policy |
| Florida simultaneous policy issue discount | The policy with the smaller liability can be purchased for a nominal fee of $25 |
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What You'll Learn
Owner's and Lender's policies
In Florida, there are two types of title insurance policies: an Owner's Title Insurance Policy and a Lender's Title Insurance Policy.
Owner's Title Insurance Policy
An Owner's Title Insurance Policy covers the buyer both legally and financially, ensuring that they will not be held liable for any title flaws that arose before they purchased the property. This policy will remain in effect as long as the buyer or their heirs own the property. It is not mandatory to purchase this policy, but it can help protect your financial investment in the home. The policy should be issued for the full insurable value of the premises, which is the sale price of the property, and there is no expiration date.
Lender's Title Insurance Policy
Lenders will require a Lender's Title Insurance Policy to protect themselves. This policy protects the lender for the amount they lend, and it can be issued for any amount up to 125% of the actual loan amount. The policy remains in effect until the loan is paid in full.
Simultaneous Issue Rates
When an owner's policy and a lender's policy are issued simultaneously within the same transaction and insurer, the rates are as follows: the owner's rates are $5.75 per thousand for the first $100,000, then $5.00 per thousand up to $1 million of coverage. The lender's rate will be a minimum of $25 for an amount of coverage not exceeding the limit of the owner's policy.
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Premiums and additional costs
The premium rates for title insurance in Florida are calculated based on the liability amount and are promulgated by the Florida Department of Financial Services. The rates vary depending on the liability amount and are as follows:
- $5.75 per thousand dollars for the first $100,000 of liability
- $5.00 per thousand dollars for liability between $100,000 and $1,000,000
- $2.50 per thousand dollars for liability between $1,000,000 and $5,000,000
- $2.25 per thousand dollars for liability between $5,000,000 and $10,000,000
For example, let's calculate the premium for a property with a liability of $500,000. The premium would be calculated as follows:
- For the first $100,000: $5.75 x 10 = $57.50
- For the next $400,000: $5.00 x 4 = $20.00
- The total premium: $57.50 + $20.00 = $77.50
It's important to note that these rates don't include additional title policy endorsements, such as the Florida Form 9, which may further increase the total premium.
When purchasing a property, it's common to acquire both a Lender's Policy and an Owner's Policy. In Florida, the buyer typically pays for their Owner's Policy in specific counties: Sarasota, Collier, Miami-Dade, and Broward. In all other counties, the seller usually covers this cost. A significant discount is offered when both policies are purchased simultaneously; the policy with the smaller liability can be obtained for a nominal fee of $25.
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County-specific customs
The customs regarding title insurance payment in Florida vary across its 67 counties. Out of these, 44 are identified as seller-pay counties, 22 are buyer-pay counties, and one county, Monroe County, exhibits a division on this matter.
In Sarasota, Collier, Miami-Dade, and Broward counties, the buyer generally pays for their Florida Owner's Title Insurance Policy. In all other counties, it is customary for the seller to pay for this policy. However, within Monroe County, there is a mix of practices. Islamorada and the Upper Keys follow the buyer-pay tradition, while Marathon and the Middle Keys adhere to seller-pay customs, and Key West and the Lower Keys exhibit a mix of both customs.
The Naples Area Board of Realtors® and Association of Real Estate Professionals, Inc.® (NABOR) stipulates that in Lee or Charlotte Counties, the seller covers the premium for the owner's title insurance policy, even though the buyer selects the title insurance agent.
It is important to note that real estate contract terms are typically open to negotiation, and certain closing costs traditionally fall under the responsibility of either the buyer or the seller. Regarding the payment of documentary stamp tax on the deed in residential transactions, there is a consensus that this fee is the seller's responsibility.
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Discounts for simultaneous policies
In Florida, there are two types of title insurance policies: the Lender's Title Insurance Policy and the Owner's Title Insurance Policy. The former protects lenders against issues arising from defects on the title of a Florida property, while the latter protects the buyer or borrower in the same scenario. Typically, you pay for both policies, but Florida has a policy known as the "simultaneous issue rate", which allows you to buy both at a significant discount.
For example, a title insurance policy computed using the 2020 rates on a $100,000 property or loan would cost around $575. The title insurance policy premium on a $200,000 property or loan would be approximately $1,075. As your property value or loan amount increases, the cost of title insurance decreases as a percentage of the property or loan price.
In a typical residential transaction, a lender quotes the discounted rate on a Loan Estimate. However, if this premium increases, it could result in a tolerance violation or increased annual percentage rate. Therefore, the CFPB wrote that any simultaneous issue discount must be applied to the owner's policy premium and not the loan policy premium.
The new calculation method applies regardless of which party to the transaction is paying the owner's policy premium. For example, the premiums on the purchase of a $300,000 residence with a $240,000 loan closed simultaneously with actual premiums are as follows: on a transaction closed prior to the effective date of the new rules, the seller would pay $1,090 and the buyer would pay $469. On the same transaction closed after the effective date of the new rules, the disclosure would reflect the seller paying $631 and the buyer paying the full loan premium of $928.
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Verifying a title company's license
When verifying a title company's license in Florida, it's important to understand the role of title companies and the regulations they must follow. Title agents and title companies play a critical role in facilitating real estate transactions in Florida. Their main function is to perform a title search and examination, procure title insurance, and provide closing services to ensure the effective and valid transfer of property ownership from the seller to the buyer.
In Florida, attorneys do not require additional certification to act as title agents, but non-attorney title agents must be licensed by the state. The Florida Department of Financial Services oversees the licensing and regulation of title agents, and non-attorney agents must submit an application to this department to obtain their license.
To maintain their license validity, title agents must complete continuing education requirements and stay updated on changes in Florida laws and regulations regarding title insurance. They must also comply with specific state regulations, such as protecting the interests of buyers by ensuring transparency, managing escrow accounts to prevent fraud, and maintaining accurate records of all transactions.
To verify a title company's license in Florida, you can contact the Florida Department of Financial Services to confirm the company's licensing status and ensure they are in compliance with the relevant regulations. You can also inquire about the specific requirements and education necessary to maintain a valid license, as well as the disciplinary actions that may be taken for non-compliance. By doing so, you can ensure that the title company you are working with is authorized and qualified to facilitate real estate transactions in the state of Florida.
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Frequently asked questions
The 2022 promulgated rates for title insurance in Florida are calculated as follows:
- $5.75 per thousand dollars up to $100,000 of liability
- An additional $5.00 per thousand dollars between $100,000 to $1,000,000 of liability
- An additional $2.50 per thousand dollars between $1,000,000 to $5,000,000 of liability
- An additional $2.25 per thousand dollars between $5,000,000 to $10,000,000 of liability
The cost of a Florida title insurance owner's policy and lender's policy are $1,325 and $25 respectively.
In the Florida counties of Sarasota, Collier, Miami-Dade, and Broward, the buyer generally pays for their own Florida Owner's Title Insurance Policy. In all other counties, the seller usually pays for the Florida Owner's Title Insurance Policy. It is important to note that the purchase of a Florida Owner's Title Insurance Policy is completely optional.
