hungryhorace

Hello!

I'm being quoted just over a grand for owners title insurance. To me, on top of already expensive closing costs, this seems a total waste of money. I fail to see the realistic protections it's going to offer me.

What are others opinion on owners title insurance please? Did you take it out? What practical scenario could it be used in?

Thanks!

Hotscot

Well for one, if you had an unknown lien against a property it can prevent you from getting a mortgage, remortgaging, or selling. (And it's really easy for someone to place a lien against you.)

The Title Insurance researches this I believe.

hungryhorace

If I fell into debt, right? Can one not sell a house here in the US if there is an outstanding debt against you? (Genuinely not sure, hence asking)

SanDiegogirl

Usually its the buyer who asks for the Owners Title Insurance to protect them against any future liabilities - liens, errors in deeds, easement issues.

..... and in our part of the country its the seller who pays for it.

Are you the seller or buyer of the property?

Bluegrass Lass

Let's say you hire a contractor for a remodel, and after he/she is done there is a dispute about what you owe & you refuse to pay the balance. The contractor can then put a lien on the property. This can prevent you from selling it. It has nothing to do with how much debt you have.

IIRC, title insurance protects you, as a new owner,from some other party suing you over a lien that may have been put against the property in the past.

Hotscot

More likely the sale wouldn't go through from the buyers side. They wouldn't get approved if there was a lien against the property.

And it's infuriatingly trivial to have a lien placed against you whether you did indeed owe money or not.

S Folinsky

Usually, the lender insists on a policy of title insurance. We recently re-fi'd and the Credit Union had us buy a new policy of title insurance. However, the price was lower since there was already a policy in place from our last re-fi and before from the purchase.

BTW, it is not true "insurance." Insurance is protection against risk. A title policy is a guarantee of the state of title.

What can happen? Let's say there is a fraudulent conveyance in the chain of title and it comes up later. That is where title insurance comes in.

As to who pays for it -- that is subject to local custom and practice.

hungryhorace

Buyer. In MA the buyer pays for both the owners and lenders title insurance.

hungryhorace

Agreed re your comments about 'insurance'.

To be clear, we are compelled to purchase Lenders Title Insurance (why the buyer pays for this and not the mortgage company is beyond me) but it's optional whether we purchase Owner's Title Insurance.

My take on this is, after reading further, is that the Lenders prerogative will be to defend the title, in the process defending you also. So purchasing separate Owner's Title Insurance seems a bit null and void.

But, as I say, this is my first home purchase in the US so I welcome all input !

hungryhorace

Appreciate the clarification. Bizarre system, isn't it where a contractor can place a lien on the property without so much as a court order.

This would have come up as part of the previous searches conducted by the title insurer I believe?

SanDiegogirl

As a buyer I, personally, would want Owners title insurance - one never know what might crop up and in this litigious environment one can't be too careful.

hungryhorace

If our closing costs were lower, I would be more mindful to take it. I don't remember any of these type of costs involved when I purchased my English home. sigh.

But its costs thousands in closing, as well as purchasing new appliances. Without selling shares or transferring funds from the UK (which I don't want to do given how low the $ is against sterling now) I am watching what we spend on closing.

Hotscot

Can be a nightmare.

Our house builder did it to us and by the time we got it released the mortgage rates had gone from 5% to 6.25%.

We sued him for a bundle and got a judgement.

I now have a very legitimate lien against his house.

hungryhorace

Grief. Sounds a nightmare. Why is a court order not required before such a lien can be placed??

sir_eccles

Weird stuff can happen with title chains, very much worth the money. A title search should find everything but it is easy for things to get missed. Plus there is outright fraud that goes on too. Just happened to read about the following bizarre story, not sure if it would help here but still.

The extraordinary ‘theft’ of a woman’s NYC home | New York Post