What is Title Insurance?
Title insurance is an important cost component within Closing Costs that always intrigues a first time home buyer. Title insurance in Pennsylvania 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 Pennsylvania title insurance policies: Lender’s Title Insurance Policy and Owner’s Title Insurance Policy.
Lenders in Pennsylvania often require borrowers to purchase a Pennsylvania Lender’s Title Insurance Policy which guarantees protection for Pennsylvania lenders against issues arising out of defects on the title of a Pennsylvania property. On the other hand, the Pennsylvania Owner's Title Insurance Policy protects the buyer against claims and liens.
Title insurance policy premiums in Pennsylvania 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 Pennsylvania title insurance calculator.
How much does Title Insurance Cost in Pennsylvania?
Closing costs in Pennsylvania are all inclusive. The title insurance fee across all PA counties includes title premium, examination and settlement or closing fees, and every other charge.
A property worth $200,000 will cost around $1,600 on sale rate and around $1,388 on sale rate.
Non sale rates are applicable for refinancing while the sale rate is applied to fresh mortgage loans.
The percentage rate decreases as the sale price of the property increases. A $500,000 property will cost you $3,305 on sale rate and $2,835.
Enhanced vs. Non Enhanced Rates
These prices are applicable for policies that are not enhanced. Pennsylvania has something called enhanced versus non enhanced policies. The enhanced policies cost an additional 10% on top of non enhanced costs.
That means a 200k property will cost $1,754 at the same rate and $1,521 and non sale rate.
Note, that these costs do not include the multiple endorsements that could further increase the total price.
Using the rates in the table let’s calculate the title insurance cost for a $200,000 property.
How to calculate title insurance for Pennsylvania?
Title insurance rates for Pennsylvania are given below:
| Property Price | Sale Rate | Non Sale Rate |
| $0 - $30,000 | $569 | $512 |
|
Each additional $1,000 (or fraction thereof), add |
||
| $30,001- $45,000 | $7.41 | $5.98 |
| $45,001 - $100,000 | $6.27 | $5.41 |
| $100,001 - $500,000 | $5.70 | $4.84 |
| $500,001 - $1,000,000 | $4.56 | $4.27 |
| $1,000,001 - $2,000,000 | $3.42 | $3.13 |
| $2,000,001 - $7,000,000 | $2.28 | $1.99 |
| $7,000,000 - $30,000,000 | $1.71 | $1.71 |
| $30,000,000 and above | $1.42 | $1.42 |
What is Owner's Title Policy in Pennsylvania?
While lender's policy safeguards the lender from liens, unknown defects such as missing heirs, incorrect documentation, unjust court proceedings, etc. can also pop up that do not show up in the title search. This is where the owner's policy shields the owners and protects their ownership. Hence, it is always recommended that onwer's policy be purchased along with the lender's policy.
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.
What is Lender’s Title policy in Pennsylvania?
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 Pennsylvania?
Title insurance may not cover the following:
- Damages due to natural calamities such as thunderstorms.
- Infestation
- Financial losses due to inadequate property inspection.
- Damage due to a fire
How long is the title policy valid in Pennsylvania?
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.
Why is Title Insurance necessary?
Title insurance is a must have for every buyer buying properties across Pennsylvania. This is because the land and the property may have various rights that might be diversified across multiple owners. For example, if property taxes are pending for the property, the government can have a lien against it without the new owner ever knowing about it.
This is where the lender's policy safeguards the lender from such discrepancies that are revealed during the title search.
How much does Lender's Policy cost in Pennsylvania?
There is no separate price for lender's policy and owner's policy in Pennsylvania. The cost of title insurance is all inclusive and covers both parties if purchased.
How long does it take to get Title Insurance in Pennsylvania?
It does not take more than 4-5 days to get the title commitment back from the seller and be sure that the property has no impending liens.
Who regulates Title Insurance prices in Pennsylvania?
The Title Insurance Rating Bureau of Pennsylvania (TIRBOP) 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 Pennsylvania?
The buyer usually pays title insurance policy in Pennsylvania, and the buyer has the legal right to select the title company. Most homebuyers seek recommendations from the real estate agent while choosing a reliable title company.
Is Title insurance required in Pennsylvania?
Title insurance is mandatory on both real estate purchases secured by a mortgage and mortgage refinances in Pennsylvania. 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 Pennsylvania?
Most homebuyers seek recommendations from the real estate agent while choosing a reliable title company in the state of Pennsylvania.
Are Title Insurance fees negotiable?
Most of the time, title insurance fees are not negotiable. What buyers can do is ask their agents for them to negotiate and let sellers pay the amount. In some cases, if the property is being resold in less than 5 years of time, title insurance costs could be waived off.