In my opinion, title insurance is an absolute requirement in any real estate transaction. Despite the fact that I am a seasoned real estate attorney, I purchased owner’s title insurance when I bought my own home. With the number of title and bank paperwork issues on the rise, I’d rather not have to be concerned about concealed title defects that might hinder my ability to refinance and sell my home in the future.
The problem is that most property purchasers have no idea what title insurance is or what it covers, and they only see it on the closing settlement statement for the first time. Closing attorneys and title insurance providers need to do a better job of describing the many benefits and value of title insurance so that consumers don’t think it’s simply another gimmick.
Title insurance is an insurance policy (officially an indemnification policy) that protects homeowners and lenders from actual financial loss if certain covered difficulties with property title rights arise. Even while Massachusetts closing attorneys check and certify each title to real estate prior to a closing, there are often hidden title flaws that even the most thorough title search will miss. Title insurance covers the expense of defending against any insured claim in addition to providing financial protection.
Lender’s and owner’s policies are the two types of title insurance. Most public mortgage lenders in the United States demand lender policies, which are often paid as part of the closing expenses. Home buyers pay for owner’s policies, which are optional. In this post, I’ll go over the policies of the property owner.
The current foreclosure paperwork snafu, as well as the recent Massachusetts high court judgement in U.S. Bank v. Ibanez, are excellent instances of the value of title insurance. The Ibanez decision caused thousands of titles in Massachusetts to be declared invalid as a result of incorrect foreclosures. Those who did not have owner’s title insurance were left to deal with title issues on their own, which was quite costly. Those who had title insurance, on the other hand, were able to sell their homes because the title insurer issued “clean” policies that covered the flaws.
Here are some more examples of how title insurance protects you in the real world. I recently represented a condominium seller who was surprised to hear a day before closing that her unit had multiple unpaid mortgages and liens from the previous developer. Fortunately, she had an owner’s title insurance policy in place, which allowed her to close on time. I represented a young family who were shocked to hear that the property they were about to purchase was subject to a long-lost heir of a previous owner’s claim. The title insurance company agreed to sue the “missing” heir in order to clear the title. If title insurance had not been available in these transactions, the transactions would have been canceled outright or the closings would have been postponed for months, if not years, until the issues were resolved, if they were handled at all.
An owner’s policy of title insurance covers a variety of additional forms of title defects, in addition to undischarged mortgages and the sudden appearance of unknown or missing heirs claiming an interest in the property.
All major title insurance providers now offer a new extended or enhanced coverage package that includes:
Please read my post 50 Ways To Lose Your Home for a complete list of just about every imaginable situation covered by title insurance.
Title insurance is a one-time charge that is determined based on the purchase price of your home and is paid at closing. Standard coverage is $3.65 per $1,000 of property value. Enhanced coverage policies cost $4.00 per thousand dollars and offer better coverage (for example, for boundary disputes) as well as inflationary protection. We always recommend expanded coverage these days because it is a better bargain. There is a significant reduction when you get both lender’s coverage (always needed by mortgage lenders) and owner’s coverage at the same time.
Because you just have to pay once, title insurance provides complete coverage for as long as you or your heirs own the property. Those who refuse title insurance justify their decision by claiming that the risk of a title problem is insignificant and therefore not worth the cost. That is untrue. I could write a book on the various types of title problems I’ve seen derail closings and drag on for years as a former claims counsel for a large title company.
The closing attorney makes certain that the property’s title is examined, confirms that the title is “marketable,” and issues the title insurance policy. While all public lenders in the United States demand lender’s policies of title insurance, closing attorneys should always advise buyers to purchase owner’s policies. Attorneys do get a cut of the title premiums. As I previously stated, even the most thorough title search cannot identify a hidden title problem that might jeopardize any subsequent sale or refinancing of the property.
Who pays title insurance in MA?
Attorneys are needed to be present at the closing in Massachusetts. The bank’s attorney is required to conduct a title search at the Registry of Deeds and certify that the buyer has a good, clear, recordable, and marketable title. The fees for this test are paid by the buyer. Even though it covers the lender rather than the owner, the bank frequently obtains lender’s title insurance, which is paid for by the buyer. The buyer might purchase owner’s title insurance for his or her personal safety at the closing. Pulgini & Norton’s experienced title insurance attorneys can advise you on title insurance and title difficulties, as well as assist you with the closing of your real estate transaction.
Title insurance is a type of insurance that protects homeowners and their lenders from financial loss if certain issues occur over ownership rights in real estate. Attorneys search and certify each title to real estate during closing, but there are sometimes hidden title flaws that a comprehensive title search cannot disclose. The expense of fighting against claims covered by title insurance is also covered.
Most mortgage lenders require title insurance in the form of lender’s policies. They are covered by a single premium that is paid as part of the closing costs. Home buyers can also purchase owner’s title insurance plans. For as long as you or your heirs possess a parcel, these policies pay to correct certain title issues found at the last minute or after the sale.
If an heir of a previous owner comes forward after a sale, the title insurance company may launch a lawsuit against the heir in order to clear the title. Similarly, an erroneous boundary description, a fraudulent document, or a botched foreclosure will be covered by the owner’s policy. Adverse possession or prescriptive easements, faulty surveys, pre-existing violations of zoning regulations or restrictive covenants, and building permit violations are among concerns that an owner’s title insurance policy may cover.
When a problem arises, the title insurance company can either fix it at no cost to the policyholder or compensate the policyholder for the actual loss suffered, subject to deductibles, liability limits, and exclusions. If the fault is identified only when the property is being sold, the title insurance firm will normally agree to insure the future buyer or lender so that the transaction can proceed.
How much is transfer tax in MA?
The amount of the transfer tax is determined by the price of the property and its location. In Massachusetts, the standard transfer tax rate is $2.28 per $500 of property worth.
Some counties, however, levy additional transfer taxes. The combined state and county excise rate in Barnstable County, for example, is $2.85 per $500.
Excise stamps are purchased from the Registry of Deeds in the county where the property is sold to pay the tax. The stamps are then applied on the deed, certificate of sale, or transfer.
If a taxpayer fails to use enough excise stamps on a deed to cover the transaction, the state has three years to charge the excess tax. In addition, there will be an extra interest fee.
The Department of Revenue can levy the tax and penalties at any time if the taxpayer does not use any excise stamps at all on a deed.
How do I find owner’s title policy?
There’s always the possibility that a homeowner will lose all of the documents linked with their closing for any reason. This isn’t completely hopeless, at least not in terms of your title policy. Contact your lender if you can’t find your Settlement Statement, Closing Disclosure, or other paperwork. Even if you don’t recall the name of your title insurance firm after years, your lender can assist you in obtaining a copy of your policy. Because your lender’s title insurance policy was purchased when the loan was granted, this is the case. While owner’s policies are optional, all mortgaged property purchases require a lender’s policy, so your lender can help you get the documents you need. A copy of your closing form is frequently kept on hand by lenders. Borrowers are usually able to acquire copies of both documents from the lender.
You’ll return to the title insurer with these documents to complete the process of acquiring a copy of your lost insurance.
Who pays the transfer tax in Massachusetts?
IS AN EXCHANGE OF TWO PIECES OF REAL ESTATE SUBJECT TO THE DEEDS EXCISE IN MASSACHUSETTS?
DISCUSSION: The state of Massachusetts levies an excise on the transfer of any deed, instrument, or other writing that conveys real estate to a buyer. 1 of G.L. c. 64D. The excise is based on the price paid for the property, and it applies whenever the price, exclusive of any lingering debt or encumbrance on the land, is more than $100. The tax is paid by the individual who creates or signs the deed, and it is documented by a stamp. As of July 1, 1989, the tax is $2.00 per $500, or portion thereof, plus a 14 percent surtax, i.e. $2.28/$500, with the exception of Barnstable County, where the rate, including surtax, is $2.85/$500. The existing rates are set to change on July 1, 1992.
The conveyance of each parcel is subject to the deeds excise when parties trade real estate. Only the conveyance of the real estate is subject to the excise if a piece of real estate is conveyed in exchange for property other than real estate (i.e., personality). The value of the property obtained by the transferee is the consideration in each case in a like-kind transaction.
The amount of existing encumbrances is not taxable when property is conveyed subject to existing encumbrances that are not eliminated at the time of sale. Encumbrances placed on the property at the time of sale, however, are not eligible for a discount. See DOR-D 88-18 for more information.
Fred and Ginger agree to trade apartment buildings in Example 1. Fred’s property in Newton is valued at $450,000. Ginger’s building in Boston is valued at $500,000. Every structure will be refinanced. In addition, Ginger will get a $50,000 cash gift from Fred.
As the author of the deed given to Ginger, Fred is responsible for this amount. The additional cash is not included in the excise calculation because it is not real estate subject to the deeds excise.
Example 2: George and Gracie agree to trade George’s $150,000 Leominster real estate for Gracie’s $95,000 stock and a $55,000 cash payment. The property will be refinanced by Gracie.
As the maker of the deed provided to Gracie, George will pay this sum. On Gracie’s transfer of the shares to George, no deeds excise is due. Only the transfer of real estate is subject to the excise.
DIRECTIVE: Real estate exchanges are subject to the deeds excise, which is calculated based on the total consideration paid for each piece of real estate, less any lien or encumbrance on the property that remains at the time of sale.
This Directive is the Department of Revenue’s official position on the law’s application to the facts as given. Unless it is canceled or changed in accordance with 830 CMR 62C.01(5), the Department and its workers will obey this Directive, and taxpayers may rely on it (e). However, the impact of subsequent legislation, regulations, court decisions, Directives, and TIRs must be taken into account when applying this Directive, and Department personnel and taxpayers may rely on it only if the facts, circumstances, and issues presented in other cases are substantially the same as those set forth in this Directive.
How much tax do you pay when you sell a house in Massachusetts?
If you’re selling a house in Massachusetts or New Hampshire, it’s a good idea to figure out the costs ahead of time so you’re not caught off guard at closing. Home sellers should budget for deed preparation, as well as a Title V Certificate if there is a septic system and a smoke detector certificate in Massachusetts.
Many house sellers are unaware that when they sell their home, they must additionally pay a real estate transfer tax. A real estate transfer tax is imposed in almost every state. Because an actual embossed stamp had to be placed on the paper to indicate that the tax had been paid years before, it’s frequently referred to as a “stamp tax.” On the document, adhesive stamps are now used. Deed stamp, excise tax, document stamp, and transfer tax are some of the other names for this levy.
Who Pays the Tax Stamps in MA?
Tax stamps are a necessary fee collected by the Department of Revenue in the state of Massachusetts. In Massachusetts, the seller is ultimately responsible for paying the tax. However, because everything is negotiable, it is critical for both the buyer and seller to get familiar with the transfer taxes.
How Much are Tax Stamps in MA?
Tax stamp prices differ by state, area, and county. In Massachusetts, the average cost per $1000 of sales price is $4.56. For example, if your home is worth $500,000, your transfer taxes will be $2,280. However, certain counties, such as those on Cape Cod, levy a different rate, such as Barnstable County, which costs $6.12 per $1000. This is something you’ll want to discuss with your real estate agent when putting together a budget for selling your house to ensure you have all the required information.
Who Pays the Tax Stamps in NH?
Transfer taxes are handled differently in New Hampshire, where they are often divided evenly between buyers and sellers. The tax is paid at the time the deed is recorded to the registry of deeds.
How Much are Tax Stamps in NH?
In New Hampshire, the real estate transfer tax is normally 1.5 percent of the property’s fair market value or the purchase price. For both buyers and sellers, it might be calculated as $15 per $1000 total or $7.50 per $1000. However, if the property is worth less than $4,000, the minimum tax will be $20. The closing agent determines the price, which is detailed in the settlement statement.
How is the Transfer Tax Paid?
When you record the Deed at the Registry of Deeds in the county where the property is situated in Massachusetts, the closing attorney will collect on the HUD Settlement Statement and pay the tax for you. Visit the Secretary of the Commonwealth of Massachusetts website for a complete list of Registry of Deeds offices in Massachusetts.
When you record the Deed at the Registry of Deeds in the county where the property is situated in New Hampshire, the closing attorney will collect and pay the tax on your behalf. To discover the Registry of Deeds for each county, go to the New Hampshire County Registries of Deeds page.
Rules and Regulations for the Processing of the Land Bank Transfer Fee on Martha’s Vineyard
Who pays for the deed of sale?
A Deed of Sale is a contract in which the seller gives the buyer property and the buyer pays the purchase price. When the Deed of Sale is delivered, ownership of the property is transferred to the buyer.
A Deed of Sale (akin to a Contract to Sell) lays forth the essential details of the transaction, including the purchase price, payment periods, and warranties. While a Deed of Sale can be used to sell any property, it is most usually used to sell (a) land; (b) houses; (c) condominium units; (d) vehicles; and (e) other valuable goods.
To process the transfer of the Certificate of Title over the property to the buyer, government entities sometimes require a notarized Deed of Sale. The Register of Deeds (for land) and the Land Transportation Office normally request these (for cars).
Who pays the deed recording fee in Massachusetts?
The seller gets charged $4.56 per $1,000.00 in Massachusetts excise stamps when the title is transferred. These are paid by the closing attorney at closing, with cash withdrawn from the sale profits.