What is the purpose of a title search and title insurance in Florida transactions?

• A. To determine property value for tax purposes
• B. To set property boundaries on a survey
• C. To verify ownership and identify liens or defects in title; title insurance protects against losses from title defects
• D. To assign mortgage terms to new owner

Answer: (C)

The main idea is to ensure a clean transfer by confirming who owns the property and uncovering any issues that could affect title. A title search digs through public records to verify the chain of ownership and to identify liens, judgments, mortgages, easements, covenants, and other defects that could cloud or affect the transfer. This helps buyers and lenders know they’re getting clear title and can anticipate any problems before closing.

Title insurance then provides financial protection against losses from those defects that the search didn't reveal or that arise from events after the search, such as forged documents, undisclosed heirs, errors in public records, or certain unpaid taxes. The owner’s title insurance policy protects the buyer’s interest, while a lender’s policy protects the lender’s security interest. The policy is typically paid at closing and remains in force as long as someone holds an ownership interest in the property, offering defense costs and restitution up to the policy limits if a covered claim arises.

This process is distinct from setting property value for taxes or determining boundaries with a survey, and it isn’t about the loan terms themselves—those come from the mortgage financing. In Florida transactions, title search and title insurance together help ensure that the property can be transferred with marketable title and that buyers and lenders have protection against title-related losses.