frequently asked questions
There are essentially two types or levels of Owner Policies available to purchasers of real estate. The following will provide basic information regarding each type. Our Attorneys are available at any time to discuss the nuances of each Policy, in the event you have further questions.
The first type is commonly referred to as the “Standard” or “Basic” policy. The standard insurance policy provides coverage for many matters affecting the insured property, but has limitations. This type of policy is generally designed to insure owners of Raw Land, Mobile Homes, Commercial Properties and lenders providing construction financing.
The next type is commonly referred to as an “Enhanced”, “Expanded” or “Homeowner” policy. As you might expect, these policies include everything in the basic policies, and quite a bit more. Perhaps the two biggest additions to these policies is automatic continuation of coverage in the event title is transferred to a Trust, etc. for estate planning purposes and coverage for events which may occur after the date of Policy (during the insured’s period of ownership). These policies are specifically designed for owner-occupied properties and second homes.
As a matter of course, if the enhanced policy is available for your particular transaction, it is advisable to obtain it as the increase in coverage far outweighs the increase in premium that accompanies it.
Title Insurance premiums are a one-time fee which is paid as the time of closing. The premium is charged to the buyer on the settlement statement and the coverage continues for as long as the insured owns the property and in certain circumstances, beyond.
New Hampshire, Maine and Massachusetts, it is customary for the Buyer to purchase their Owner title insurance policy as well as the Loan policy insuring any Lender who provides financing for the transaction.
This is a very common question and the short answer is that these policies do very different things. The Lender Policy only provides coverage for the Lender itself, during the period in which the mortgage it insures is outstanding. Until such time as a loan is in default or a Lender forecloses and takes possession of the property, there are no obligations to provide coverage under the Policy. Likewise, each time a mortgage is paid in full during a sale or refinance, a new Lender Policy will need to be obtained insuring any new loans, even if the lender remains the same.
Generally speaking, we love to invite our customers to close in our office in Portsmouth. However, we understand that at times circumstances make this more difficult, or impossible. In those instances, we are happy to coordinate with the parties to make the process as efficient and convenient as possible.
FIRPTA stands for “Foreign Investment in Real Property Tax Act”. Since 1980, this law has ensured that foreign taxpayers pay income tax on U.S. property sales. It is similar to the capital gains tax paid by U.S. citizens, but applies only to foreign sellers who are otherwise not subject to capital gains when selling real property.
-Technically, the foreign seller owes a FIRPTA tax — but in practice, the buyer is held responsible for setting the money aside from the proceeds of the sale.
-FIRPTA is straightforward, but nuanced in how it applies to individual transaction. It is imperative that Cornerstone be informed of a foreign seller as early as possible in order that we may plan accordingly, and all parties can review available options.