What is Title Insurance in Arkansas?

Title insurance is an important cost component within Closing Costs that always intrigues a first time home buyer. Title insurance in Arkansas protects buyers and lenders from financial liabilities that may arise due to a title defect or a hidden lien. 

Have a look at our Title Insurance explainer video to see how title insurance can protect your lender and your ownership in case of a title defect. 

There are two types of Arkansas title insurance policies: Lender’s Title Insurance Policy and Owner’s Title Insurance Policy.

Lenders in Arkansas often require borrowers to purchase an Arkansas Lender’s Title Insurance Policy which guarantees protection for Arkansas lenders against issues arising out of defects on the title of an Arkansas property. On the other hand, the Arkansas Owner's Title Insurance Policy protects the buyer against claims and liens. 

Title insurance policy premiums in Arkansas show up as line items within a closing cost worksheet for a buyer and seller such as a Closing Disclosure, Loan Estimate, HUD-1, or an ALTA Settlement Statement. If you're looking to get a preview of what these costs look like, use this free Arkansas title insurance calculator.

How much does Title Insurance cost in Arkansas?

Arkansas is not one the most happening states when it comes to volumes of real estate transactions. The average value of homes sold in Arkansas is $145,323. 

Overall, a property of $150,000 costs $450 for the owner’s policy while a sum of $50 is charged for the lender’s policy that safeguards the lender. 

Here are some more use cases:

  • For a purchase price of a $150,000 property in Arkansas with a 20% down payment ($30,000), the cost of a title insurance policy and lender's policy are $450 and $50 respectively. 
  • For a purchase price of a $150,000 property in Arkansas bought with full cash, the cost of the title insurance owner's policy is $450. 
  • For a purchase price of a $200,000 property in Arkansas with a 20% down payment ($40,000), the cost of the title insurance owner's policy and lender's policy are $550 and $50 respectively.
  • For a purchase price of a $200,000 property in Arkansas bought with full cash, the cost of the title insurance owner's policy is $550. 
  • For a purchase price of a $500,000 property in Arkansas with a 20% downpayment ($100,000), the cost of the title insurance owner's policy and lender's policy are $1,150 and $50 respectively. 
  • For a purchase price of a $500,000 property in Arkansas bought with full cash, the cost of the title insurance owner's policy is $1,150. 

How is Title Insurance Calculated in Arkansas?

Arkansas gives a total of 5 pricing slabs that helps you calculate the cost of Title Insurance. These are:

Property Rate Cost per $1000
$0 - $100,000 $3.50
$100,000 - $5,000,000 $2.00
$5,000,000 - $10,000,000 $1.75
$10,000,000 - $15,000,000 $1.50
Above $15,000,000 $1.25

 

Say you want to calculate the cost of the owner's title policy for a $150,000 property. The total cost will be 

    (100000/1000) x $3.50

+  (50000/1000) x $2.75

  _____________________

 = $487.5

What is the Owner’s Title policy in Arkansas?

The owner's policy is a legal document that shields the owners from unknown defects such as missing heirs, incorrect documentation, unjust court proceedings, and protects their ownership. The owner’s policy constitutes the major share of the title insurance cost. 

What is Lender’s Title policy in Arkansas?

The lender’s policy is often purchased along with the owner’s policy. It protects the lender from title defects such as a pending construction lien on the property, errors in the title, and other issues that may arise after the title has been transferred to the buyer. 

What is not covered in Title Insurance in Arkansas?

Title insurance may not cover the following:

  • Infestation
  • Financial losses due to inadequate property inspection.
  • Damages due to natural calamities such as thunderstorms.
  • Damage due to a fire

How long is the title policy valid in Arkansas?

The title policy remains valid till the time you remain the owner of the property. Only when you decide to sell, a new policy must be made in the name of the buyer. The lender’s policy is valid till the mortgage is paid back. 

Who regulates Title Insurance prices in Arkansas?

The Arkansas Insurance Department is responsible to hand out licenses to title companies and also decide and monitor the charges levied by these title companies in the state.   

Who pays for Title Insurance in Arkansas?

The cost of title insurance is negotiable in Arkansas but buyers generally expect the seller to pay. It won’t be incorrect to say that it is customary for the seller to pay for both policies. 

Is Title insurance required in Arkansas?

The state mandates that the lender's policy is necessary to buy in order to protect the lender from hidden title defects. However, it also states that the Owner's policy may also be purchased as the lender’s policy only protects the lender and not the buyer. 

As a general rule of thumb, it is always best to go for title insurance irrespective of the fact that it is mandated by the state or not.

Should you shop for title insurance in Arkansas?

You can definitely shop for title insurance in the state of Arkansas by approaching any reputable title company. However, if you are skeptical, you can ask your agent or lender to help you out with the process.  

Is there any discount on Title Insurance Policy in Arkansas?

Technically there is no discount on title insurance in Arkansas. But what you can do is go for simultaneous issuing of both Owner’s Policy and Lender’s Policy at the same time. This way you only pay a fixed amount of $200 for the Lender’s Policy.