The standard Florida residential real estate contracts provide buyers and sellers with a process for issuing a title insurance policy to a buyer after the closing of a real estate transaction.   A title insurance policy insures the buyer for claims made by another person against title to the property purchased by the buyer. However, most title insurance policies contain exceptions to the title policy coverage which are not insured by the title insurance company.  

Dick Collman

Prior to the closing, a title insurance commitment should be prepared by a title company or attorney. In Lee County, the standard residential real estate contract is prepared so that in most cases the seller will choose a title company or a lawyer to prepare the title commitment and the title insurance policy. Among other things, the title commitment provides the buyer, or the buyer's attorney, with information as to the legal description of the property being purchased, the names of the buyers, the amount of the purchase price, the requirements that the seller must satisfy in order to close the sale of the property, exceptions to title insurance coverage and the title instruments that effect title to the property being purchased.

It is important that the title commitment be examined by the buyer, or the buyer's attorney, to make sure that all of the information in the title commitment is accurate, and to determine whether any of the title instruments and exceptions in the title commitment constitute title defects which could make the property being purchased unmarketable. If the exceptions or title instruments constitute title defects, the buyer, or the buyer's attorney, has a limited amount of time to object to these exceptions or title instruments. If the buyer, or the buyer's attorney, does not object to these title defects within the time prescribed by the contract, then the buyer could lose the right to object to the title defects and may be required to close on the purchase of the property, despite adverse exceptions or title instruments which could make the buyer's title to the property unmarketable.

Examples of adverse exceptions or title instruments, include, but are not limited to, outstanding mortgages, unpaid real estate taxes, unpaid liens, defective prior deeds to the property, defective legal descriptions, and owners other than the seller who may have an interest in the property.

After closing, the standard residential real estate contracts requires that the title company or attorney prepare and deliver a title policy to the buyer as the new owner of the property. If the buyer, or the buyer's attorney, did not object to the adverse exceptions or title instruments in the title commitment within the time prescribed by the contract, then the buyer's title policy may be subject to those adverse exceptions or title instruments which could render title to the property unmarketable.