Title insurance is sold in Florida in four ways
“Direct operations” are branch offices of national insurance companies. Often referred to as the ”underwriters” , these companies are Stewart Title Guaranty, First American Title, Fidelity National Title and Old Republic Title, and their subsidiaries Chicago Title, Commonwealth Title, Lawyer’s Title, and United General Title.
The “direct” operations usually rely on centralized title search and closing departments that are often located out of state or even overseas in the Philippines, India or the Dominican Republic. The local office, in the residential market, usually functions primarily as a marketing operation, with closers who obtain the signatures of clients on documents produced elsewhere. Title underwriting decisions are handled at the state or national level, rather than in the local office. Direct operations also only sell one brand of insurance-if your transaction does not fall within their guidelines, you are just out of luck.
The other methods of selling title insurance and closing services is through the use of a title agency. Title agents perform all of the tasks an underwriter “direct” office performs, except guarantee the policies. Title agents contract through the underwriters and pay them a portion of the title premium as a “commission” to issue policies backed by their company. Depending on how much of the search and examination work an agency performs, and the claims experience the agency has, the commission retained by the agent can be a substantial amount of the premium.
A second method for the sale of title insurance by agencies in Florida is through an “Affiliated Business Relationship” (AfBa) title agency-an agency where the Real Estate Broker, the Lender or the Foreclosure law firm has a piece of the action on title and closing fees. Federal and State Law require that real estate agents, brokers and lenders disclose whether they will receive a financial benefit from a title company that they recommend, but unfortunately these disclosures are often misleading or buried in the fine print.
“AfBa’s” vary tremendously in size and competence. A small number of these firms represent multiple underwriters, do their own title examinations locally, have their work reviewed by attorneys on staff and have experienced local closing/processing departments. Most AfBa’s in Michigan, however, are little more than shell companies, with one or two employees who rely on their one underwriter for all title research, most title underwriting and for “back up” help when times get busy at the end of the month. If your Realtor or Lender recommends an AfBa, make sure you understand what capabilities the Company has and what benefit your Realtor or /lender will receive for the referral.
The most common way that title insurance is sold in Florida is through the use of an independent, local title agency. The independent title agency usually represents more than one underwriter; performs its’ title examination by using local public records, supplemented by privately owned databases known as “title plants”; processes closing documents locally and has closers on staff who are trained to answer consumer questions about their closing documents. An independent agency also may have lawyers on staff that can assist the parties in the drafting of legal documents that are needed to complete the transaction such as Deeds, Land Contracts, Certificates of Trust and Powers of Attorney.
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