How Much Is Title Insurance In North Carolina in 2024?

You’re looking to buy or sell a house in North Carolina, and have heard about potentially needing title insurance.

Is it legally required? And how much is title insurance in North Carolina?

If you have questions like these, you’re in the right place. In this article, we take you through what you need to know.

Keep reading to find out more!

What Is Title Insurance?

Title insurance is a form of indemnity insurance that protects homebuyers and mortgage lenders against financial loss from defects in title to real property.

It safeguards the parties involved against potential legal issues or claims that might arise due to irregularities in the property’s history or ownership records.

Unlike traditional insurance policies that protect against future events, title insurance primarily covers events that have occurred in the past, such as fraud, forgery, undisclosed heirs, or errors in public records.

For the buyer, title insurance ensures that they have clear ownership of the property, free from any undisclosed liens, encumbrances, or legal issues.

For lenders, title insurance safeguards their financial interest in the property, ensuring that their mortgage or lien holds the priority it’s supposed to, and protecting them against any title-related losses up to the amount of the loan.

There are two primary types: Owner’s Policy and Lender’s Policy.

The Owner’s Policy is purchased by the homebuyer and provides coverage for as long as they or their heirs have an interest in the property. This policy protects the owner from financial loss if there are any defects in the title that were not discovered during the initial title search.

On the other hand, the Lender’s Policy is typically required by the mortgage lender and is purchased by the buyer to protect the lender’s interests. This policy is valid until the mortgage is paid off.

Title Insurance Rates in North Carolina

Unlike some other states where title insurance rates are either strictly regulated or completely determined by the market, North Carolina adopts a more balanced approach.

The North Carolina Department of Insurance (NCDOI) plays a critical role in this process, overseeing rate filings and ensuring that they are fair and reasonable.

Standard rates for title insurance in North Carolina can vary based on the value of the property and the amount of the loan.

According to data from Barristers Title Services and other sources, rates in North Carolina are generally competitive compared to other states.

For instance, for a property valued at $100,000, the owner’s title insurance policy might cost around $500 to $600, while a lender’s policy for the same property might be slightly less.

Factors Influencing Title Insurance Costs

Generally, as the value of the property increases, the cost of title insurance also rises.

This is because the insurer’s risk exposure is directly tied to the value of the property; higher property values typically mean higher potential financial loss in the event of a title defect.

So, insurance rates are scaled to match this risk, resulting in higher premiums for more expensive properties. It’s common in the title insurance industry to see a tiered pricing structure, where different property value ranges are associated with corresponding rate scales.

The owner’s policy is typically more expensive because it covers a broader range of risks and remains in effect as long as the owner or their heirs have an interest in the property.

The lender’s policy is usually less expensive and is only valid for the duration of the mortgage. The lender’s policy is focused on protecting the lender’s interest in the property, ensuring that their loan is secure against title issues.

Additional costs can also influence the final price of title insurance. These include endorsements, which are amendments to the standard policy that provide additional coverage for specific risks not covered under the basic policy.

Examples of Title Insurance Costs for Different Property Values

First, consider a property valued at $100,000, purchased with cash. Since there’s no lender involved, the buyer may opt for an owner’s title insurance policy only.

In many regions, the cost of an owner’s policy for a property of this value might range from $500 to $700. The lack of a lender’s policy in a cash transaction can make the total title insurance cost relatively lower.

For the same property, if purchased with a mortgage, the buyer would likely need both an owner’s and a lender’s title insurance policy.

The owner’s policy might still cost between $500 and $700, but the lender’s policy could add $300 to $400 to the total cost. Therefore, for a financed purchase, the total title insurance cost could be in the range of $800 to $1,100.

In a scenario where a more expensive property, say valued at $500,000, is purchased with cash, the owner’s title insurance policy would be more expensive due to the higher property value.

The cost might range from $2,500 to $3,000. The absence of a lender’s policy in a cash purchase keeps the overall cost down.

For the same property valued at $500,000, if purchased with financing, the cost for title insurance would include both the owner’s and lender’s policies.

The owner’s policy might cost between $2,500 and $3,000, and the lender’s policy could add another $1,000 to $1,500. Therefore, the total cost for title insurance in a financed purchase could be between $3,500 and $4,500.

Calculating Title Insurance in North Carolina

The cost of title insurance is often based on the sale price of the property or the amount of the loan. You’ll need this information to accurately calculate the insurance cost.

Title insurance rates in North Carolina may be tiered based on the property value or loan amount.

These tiers can usually be found in the rate filings of the title insurance company or on their website.

For a more streamlined calculation, utilize online tools like Elko’s Title Insurance Calculator.

Additional Fees and Charges

Some additional fees and charges can impact the overall expense. The Simultaneous Issue Rate is a reduced rate for issuing both an owner’s and a lender’s title insurance policy at the same time.

When both policies are purchased together in a real estate transaction, the simultaneous issue rate can offer significant savings compared to buying each policy separately.

A commitment premium may be charged by the title insurance company. This fee is for the title search and the issuance of a title commitment, which is a document outlining the terms and conditions under which the insurer is willing to issue a title insurance policy.

If a real estate transaction is canceled after the title search has been conducted but before the policy has been issued, the title insurance company may charge a cancellation fee.

Closing Services Insurance covers the services involved in the closing of a real estate transaction, such as document preparation, escrow services, and the facilitation of the final transaction.

Residential endorsements are additional protections that can be added to a standard title insurance policy to cover specific risks or concerns that are not included in the base policy.

Shopping for Title Insurance in North Carolina

One of the key strategies in shopping for title insurance is to compare quotes and services from various providers.

Also, the role of real estate attorneys in the process of obtaining title insurance is significant in North Carolina. They can help interpret the terms of different policies, advise on necessary endorsements based on the property’s history and location, and even assist in negotiating terms with insurers.

Legal and Regulatory Aspects

In North Carolina, the regulation of title insurance is primarily overseen by the North Carolina Department of Insurance (NCDOI).

The department’s role is crucial in ensuring that the title insurance industry operates within the bounds of state law, maintaining fair and reasonable practices for the benefit of consumers.

NCDOI sets forth regulations that govern how title insurance rates are determined and filed, ensuring they are neither excessively high nor unjustly discriminatory.

The legal requirements for title insurance in North Carolina are structured to ensure that both the property buyer and lender are protected.

While title insurance is not legally mandated for property buyers, it is highly recommended due to the protection it provides against potential title defects. In cases where a property is financed, lenders typically require a lender’s title insurance policy as part of the loan conditions.

Another important aspect of title insurance in North Carolina is the availability of reissue rates and discounts. Reissue rates are discounted title insurance rates offered when a title policy is issued on a property that has had a previous title insurance policy.

These rates can significantly lower the cost of title insurance for buyers, especially in situations where there has been a recent title policy on the property.

How Much Is Title Insurance in North Carolina?

Now you have a much better sense of the ins and outs of North Carolina title insurance. We talked through everything from what it is, to the rates in North Carolina, to the best ways to shop for it.

Whether your question is, “How much is title insurance in North Carolina?” or anything else related to buying and selling a home, we can help.

Our site has a ton of great resources, plus you can also enter your home address to get your home value and get a cash offer to sell your house!