There’s no question that when purchasing real property, buyers are determined to keep costs as low as possible. This makes knowing the title insurance costs for which the buyer is responsible very important.
In Florida, the buyer’s title insurance closing costs depend mostly on the manner in which the property is being paid for, meaning cash purchases versus financed purchases, as well as, whether the property is a new construction or resale property. For purposes of this article, we will explore the differences between financed and cash purchases.
Financed Real Estate Purchases
As the majority of real property purchases are financed through a mortgage, we’ll examine these title insurance closing costs first. And while typical buyer costs include items required by the lender, such as appraisal fees, credit reports and loan origination fees charged by the mortgagee, several other costs are exclusive to the title insurance issuance process.
First, a buyer may be responsible for the actual title insurance policies depending on which county the property is located, although this may be negotiated via the purchase contract. Our article A Title Insurance Primer explores this topic in greater detail.
Title insurance policies protect either the lender or the buyer from title, ownership and lien claims against the property that arose prior to the date of purchase. The cost of such insurance is statutorily set and depends on the purchase price of the property for the Owner’s policy and the mortgage amount for the Lender’s policy.
Another cost associated with the issuance of title insurance may be a settlement or closing fee assessed by the title insurance company for the processing of the policy and all the necessary due diligence procedures. This cost is set by the market and typically ranges from $700 to $900. And while the party responsible for selecting the title agent may vary depending on the county or contractual negotiation between the parties, this fee is usually charged to both parties.
Recording fees and documentary stamps for the mortgage are also the responsibility of the buyer with financed sales. These fees, perhaps, are two of the main differences in costs between financed and cash sales and are usually set by the county and/or the state of Florida.
For recording fees, most counties charge $10 for the first page and $8.50 for each page thereafter, plus approximately $.60 for each legal description included in the mortgage.
Documentary stamps, on the other hand, are calculated upon the value of the mortgage at a rate of $.35 for every $100 of the price. These fees will be calculated by the title insurance agent and then paid at the time of closing as a requirement for having the policy issued.
The title & lien search fees cover the costs for obtaining and producing the requisite title and lien history of the property upon which the title insurance policies will be issued and may be assessed to the buyer depending on the county or any negotiated terms between the parties.
Lenders and title agents alike typically require a survey of the subject property prior to closing. Fees for this service may range from $250 to $500 for a residential property.
Cash Real Estate Sales
As mentioned, the main difference lies in the inclusion of mortgage documentary stamps and the lender policy insurance premium. Since there is no mortgage to record, the buyer will not be responsible for documentary stamps assessed on a mortgage. Similarly, if the county or contract requires the buyer to pay the title policy premiums, there is no lender policy being issued.
In addition to these costs, a buyer in a cash closing may still be responsible for the title search fee, the survey fee, the recording fee for the deed, as well as, any lien fees associated with the purchase. And while a cash buyer isn’t obligated to obtain an Owner’s title insurance policy in Florida, it’s unimaginable that any buyer would take title to a property without first obtaining such insurance to protect their interests.
It’s also worth noting that some title insurance agents may adjust their settlement or closing costs to reflect the closing being a cash sale.
While this may not be an exhaustive list, it provides a broad picture of the title insurance closing costs that a Florida buyer may encounter when purchasing a property.
And as the saying goes in the real estate industry, “Cash is King” when it comes to keeping title insurance closing costs low for real estate buyers in Florida!
Contact us to learn how ASR Law Firm may be able to assist you with keeping control over your title insurance closing costs.
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