Knowing what is a title insurance binder can help you save money in case you are planning to sell your house within two years after you purchase it. When you buy and sell a house, you will incur costs for having its title searched.
A title insurance binder will protect the buyer of the property and the lender against any defects in the property title. In a one-time payment premium, the insurance company will be examining the public records, sell the title insurance, and prepare the title abstract.
The insurance company will also issue the insurance once the title search for the property is done. If you purchase a title insurance binder, you will be able to save money paid for title fees.
That is because the purchaser can resell the real property and obtain a policy for the title issued to the new buyer with a fraction of the cost. Note that the binder is designed for this purpose, so you cannot utilize it in all real estate transactions.
Title Interim Binder
In general, the title interim binder standard term would last up to two years. But some companies are offering an extension of another year for an additional 10-percent cost. Bear in mind that a similar title company that issued the title insurance binder should be used when you sell the property.
In most cases, the agent of the previous buyer, who is now the seller, is not aware that a title binder is purchased when the property was bought. In ordinary circumstances, the seller should be paying for the title insurance of the buyer. This is an effective method which provides a saving of cost.
Furthermore, if the developer or the buyer wants to resell the real property in two years, the interim binder is a cost-effective and useful alternative. But take note that an interim binder does not work like insurance. Rather, it is simply a commitment that an insurance policy shall be issued.
But in case a claim arises within the interim binder period, the person to whom the interim binder has been issued may choose to convert it into a title insurance policy that will name him as the insured. Additionally, a title insurance binder is only intended for buyers and not for lenders.
Temporary Insurance Binders
In essence, a temporary insurance binder will only remain effective until there is a new and permanent title issued to the property buyer. At that particular time, the new property owner will be responsible for providing evidence that a permanent policy covers the real property.
It is common for a mortgage broker to assist the new owners as they acquire new permanent insurance that will supersede the temporary title binder. Furthermore, they will also constantly check to ensure that the owner maintains the permanent coverage of the said real property.
What A Title Insurance Binder Is: Roles In A Real Estate Transaction
One of the major endeavors to do is to sell a house. Unfortunately, even if you feel like you already found your property the right buyers, it will often take weeks or even months before you can turn over the house to the hands of the buyers.
During those times, the opportunities may go to waste. So it would be wise to take extra precautions when making a real estate transaction. Among protective measures that would be helpful both for the seller and the buyer is acquiring a title insurance binder.
Again, to clarify things, title insurance and title insurance binder are not similar. So, what is a title insurance binder? Having a title insurance binder would mean that you have obtained temporary insurance, covering the ownership transaction between the buyer and the seller.
In some instances, the home insurance policy of the property seller may not be sufficient to cover the transaction, so that a title insurance binder may be helpful in this case. Usually, the binder helps provide coverage if a natural disaster or any other issues have damaged the house during the transition period.
Since a title insurance binder would usually last for up to two years only, it is ideal for people who look for properties that can be bought and sold within two years. Additionally, a title insurance binder would also provide financial benefits for buyers since it helps them save money in acquiring the policy.
Title insurance, title insurance binders, and similar documents are necessary for a real estate transaction. If you are not careful, you can end up having a mistake. The real estate attorney may be helpful for these transactions since he will make everyone understand all the insurance types involved.
It’s A Wrap!
What is a title insurance binder? Again, it is a type of insurance coverage that is usually associated with a real estate transaction. This is a temporary way to maintain insurance for the property as its acquisition takes place. But when the property has been sold, its new owner will have to acquire permanent insurance coverage.