[FIS-PUB 0218] Michigan Department of Insurance and Financial Services | 877-999-6442 | www.Michigan.gov/DIFS [11/19]
long as the defect is a covered item. Following
are examples of title defects:
liens on a property
lost, forged, or incorrectly filed deeds
property access issues
mortgage or property taxes not paid by
a prior owner
an unknown or missing heir making
claim to the property
How Does Title Insurance Work?
When you purchase title insurance, the agent or
company will search public records to
document the chain of ownership of a property.
If any liens or defects are found, the title
company will either cure them before issuing a
title policy, or exclude them from coverage.
Once the company believes that the property
title is clean, they will issue you and your lender
title insurance policies. These insurance
policies protect you and your lender financially
from any unknown claims or defects existing at
the time of purchase.
Where Do I Buy Title Insurance?
Title insurance can be purchased through a
licensed title insurance agency or directly from
a title insurance underwriter authorized to do
business in Michigan.
What Is a Title Insurance Commitment?
A title insurance commitment is a document
that is prepared after the title search that lists
the known existing defects. It is used at the
real estate closing to insure a specific property
if certain conditions are met. Generally, defects
that cannot be cured are excluded from
coverage. It is prudent to review the
commitment thoroughly, with a title insurance
professional or attorney, before you finalize
your real estate transaction.
How Much Will the Policy Cost?
A title insurance policy is issued for the current
value of the property. The owner’s policy is
typically valued according to the purchase price
for the property. The lender’s policy is
determined by the amount of the loan. There is
no benefit to overinsuring, and under-insuring
may result in insufficient coverage. There may
be discounts if you buy an owner’s and lender’s
policy from the same insurer (simultaneous
issue rate) or if you buy a policy from an insurer
that has previously insured your property
(reissue rate). Refinancing rates may be
available as well.
Who Pays for the Policy?
Either the seller or the buyer can purchase the
owner’s policy; however, there is likely a local
customary practice in your area. Ask your real
estate agent for clarification. Also, the person
that pays for the insurance has the right to
choose the title insurance provider.
The lender will typically require the borrower to
purchase a lender’s policy for the benefit of the
lender as a condition of the loan. The lender
may request or insist on a specific provider
according to its needs. Premium for a title
insurance policy is made with a one-time
payment at the time of closing.
What About Closing or “Settlement”
Services?
Many title insurance agencies also act in the
capacity of a settlement services agent. As
such, they will prepare and/or collect the
necessary documents required to finalize the
real estate transfer and execute the loan. They
will set a closing with both the sellers and the
buyers.
It is common, but not required, that the title
agency providing the insurance will also
conduct the closing. Closing agents charge fees
for the settlement services they provide. It’s
important that you ask about their fees if you
are shopping for both a title and closing agent.
There may be additional coverages available to
you, for an additional charge, which are not part
of the title insurance, but are offered by some
insurance companies that will protect you in the