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A revised title insurance policy may be necessary with deed transfer

By ERIC FEICHTHALER - Real Estate Law | Jan 20, 2022

Eric Feichthaler

Mr. Feichthaler:

I want to avoid probate on my home, so I intend to deed the property into my revocable trust I recently created. Will my Owner’s Title Insurance policy still be good, since I am still the actual owner of the property?

–Steve R.

Dear Steve:

This is a great question, and one most people would not think about. Like all types of insurance, title insurance doesn’t seem very helpful until you need it. As our readers know, nearly every real estate transaction concludes with the issuance of a title insurance policy to the new owner, which provides protection for any clouds on title missed by the title company. This could include defective deeds, missed mortgages, and other issues with title. There is a one-time premium, usually paid by the seller, at closing for this policy.

Although the policy is valid and enforceable for the entire time you own the property, it can be lost due to a transfer. Prior to 2011, the definition of “insured” was narrower than it has been since. Entities, like Florida Limited Liability Companies or Living Trusts, were not included in the definition. The answer to your question depends on when you acquired your property. If it was before 2011, your transfer may invalidate your title policy. The same would be the case if you were seeking to transfer the property into an LLC.

As noted in many of my responses to reader questions, your real estate is too valuable to take chances on a transfer without knowing all of the potential ramifications. I would seek professional advice prior to making this transfer, and depending on the timing of your acquisition, you may want to consider acquiring a revised owner policy that will continue to cover the property.

Eric P. Feichthaler has lived in Cape Coral for over 33 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or (239) 542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.