Q & A with America’s real estate professor: Title insurance on refinance
Title Insurance on Refinance
Q. I just received my closing statements from my refinance and it looks like I had to purchase another title insurance policy. I’m pretty sure I bought one when I purchased the property, why do I have to buy another? Michael L.; Arlington, Texas
A. Title insurance protects you, the buyer, for issues that could affect the title; that occurred before you purchased the property. These could be items like liens, ownership disputes and unpaid taxes. When you acquired the property, a policy was purchased protecting you. Many times the seller pays for this policy but it’s negotiable; and you bought a policy for the lender.
Yes, it seems foolish to purchase two policies covering the same thing, but you have no choice because your bank demands its own policy protection. Also, the policy you purchase for the bank is generally only for the mortgage amount, whereas the policy from the seller at closing is generally for the entire purchase price.
Now that you are refinancing, you get to buy a new policy for a new lender. Even if it is the same lender, you still get to buy a new policy. This new policy covers the period before you purchased the property, plus the time you’ve owned the property up until the date of refinancing, and any increased loan amount.
It used to be common – and may still be in some areas – that if you used the same title company there would be a discounted price on the policy. I haven’t found these recently, but definitely call up your original title company and see if they have a reduced price for a “bring down” policy that simply updates the original one.
Q. I’m ready to purchase a property and I’ve received a disclosure that there may be lead-based paint at the property. The seller says they don’t know, they’re just required to alert me that there may be lead-based paint. Is this a health issue? Martha C., Brooklyn, N.Y.
A. OK, first I’m not a doctor, so as to whether it is a health issue, you’d have to do your own research and speak to a medical professional and form your own opinion on this issue. I can give you the basics on the matter and hopefully that will assist.
Many studies show that heavy metals like lead may be hazardous to one’s health, particularly for infants whose brains are developing and who ingest it. Lead was a component in paint up until 1978. Before the 1960s some paint had much higher concentrations of lead. Federal law requires landlords and property sellers to disclose that lead may be present in the paint from homes built in 1978 or before.
It’s estimated that about 40 percent of homes in the United States were built before 1978 and have some lead-based paint. The most common issue seems to be found in older homes that have chipped paint because the property has not been maintained and infants eat the paint. Another potential issue is when homes are renovated and walls are demolished and release dust that contains lead-based paint and isn’t cleaned up before an infant inhabits the house. But in general, for the average house, the lead paint is probably sealed behind many layers of new paint during the past 35 years and probably poses little danger.
However, talk to your home inspector, do some research, consult a doctor or expert, or have the house tested for lead levels. Then you’ll know the facts so you can make the appropriate decision for your family.
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