tonrob

Hi

I'm about to close on my new home and my attorney is trying to sell me owner's title insurance. She talks a good talk about whuy it's required but I get the feeling I'm being railroaded. For example, I've only just found out it's optional - the way she was talking it made it sound mandatory.

The thought crossed my mind that she probably gets a commission for selling this. Is title insurance a good thing to have or is it just something that attorneys make a fast buck on?

If anyone has an insight into this they could share I'd be grateful.

Manc

title insurance is good in the fact that if someone has a claim to the property that the title company DIDN'T know about, could come back and sue you for their share of a property you thought you owned outright.

it's your call, but I got it, as it's better than someone 15 years from now telling me they legally own half my land / home.

bridgecross

No expert advice here, but my bank required title insurance to open the mortgage. It's (a small) part of my monthly mortgage payment. For some banks it's required, in other cases the attorney may offer it as part of the title search. See if your bank requires it, then go through the bank to find the title insurance company which they find acceptable. I'm sure if the bank does not require it, then you don't have to get it. But make sure the title search comes up clean (nobody else claims to own that property!!!) Also, I only have to pay the title insurance premiums for about 5 years, ask for how long you have to keep paying.
http://www.infobeagle.com/finance/title-insurance.htm
http://www.mywiseowl.com/articles/Title_insurance
On a related topic, your attorney should refuse to close the deal unless you get property insurance! Mine did, even though it was not required, and boy was he looking out for me. One small fire and your whole life is shot.

fatbrit

Are you borrowing money for the home?

NC Penguin

Manc's explanation is exactly what I was told by my realtor (she's a "Buyer's Agent") last year when we were purchasing a house.

Here's a concise definition of title insurance:

A policy issued to lenders and buyers to protect against loss due to disputed property ownership.

I bought title insurance. Knowing how litigious Americans can be, I thought it better to be safe than sorry. I can't remember whether it was mandatory to purchase it as part of my mortgage terms.




NC Penguin

g1ant

I had it, but my realtor insisted that the seller paid for it as part of their closing costs.

a.

AdobePinon

Take it. It shouldn't be expensive. But DO read the fine print very carefully. There will be all kinds of exceptions to the exceptions. And you can pay extra premiums (and in some cases surveying costs) to have some or most of the exceptions removed.

silvermine

even if you do buy the title insurance don't assume they will actually research the title. make sure after you close that any mortgage or other lien on the property is cleared and recorded in the registrar of deeds. you should already know what mortgages and / or liens are on the property before you close.
at the closing insist that any previous mortgages or liens be satisfied and recorded forthwith, and evidence presented that all taxes are paid to date.
and, no matter what the seller signs, check that it is done afterwards.

in other words, trust no one at their word written or otherwise.

isn't it a great country

BritGuyTN

depending on the market, the seller often pays for the buyers title insurance.

i personally think its worth it, the cost to you will probably be $1k- $1.5k

the actual cost to the title company is about 200 - 500 bucks

bear in mind I am a realtor and none of my colleagues have had an issue with a bad title - BUT with something as costly as a house I think its worth the peace of mind.

the lawyer is probably not taking a cut (unless she is the one doing the closing), unless she discloses it, but the title company I use normally give me a bottle of reasonable plonk at closing.

bottom line, you can get insurance from many different sources,you DON'T need to get it from your attorney

fatbrit

Excellent advice.

If I could possibly add...
...you can get insurance from many different sources,you DON'T need to get it from your attorney (or the title/escrow company if they are doing the closing), and even if you chose to get it from them, the price is always negotiable. It's funny how the price can drop considerably after you've sent them some quotes from other companies and you'll shop it there if necessary.

scrubbedexpat099

Defective Title Insurance is also available in the UK, not normally an issue as the Land Registry has now recorded most properties and things are relatively clear cut.

No such thing in the US, hence the issue.

Most Mortgage Co's require, so you are usually stuffed. Ours also wanted a survey.

Our next door neighbour recently had his lot surveyed, I do not think the people below realised quite where the property line was. Watching developments with interest, just glad I am not in that situation.

There was a lot of fuss in the papers recently about the kickbacks out of the 'premium' you pay. Do not know any way around it.

Manc

unless he has a state insurance license, it's illegal that he gets a cut.

scrubbedexpat099

I can not remember the details, but I used to work in Insurance, there are always ways and means. Might have been fronted through someone who had a license.

fatbrit

and, of course, nobody ever does anything illegal around the real estate business...

tonrob

Wow - lots of advice. Thanks everyone.

Just to clarify - they were trying to sell me 2 title insurance policies, one that protects the lender 9and which they're saying is mandatory and I can understand that) and one that protects me as the owner. It's the owner's one I'm considering not taking.

Together they came to over a thousand bucks and I can save 600 by not taking the owner's one. I have since asked the attorney what came up in their investigations over the title that made them think that it would be a good idea for me to protect myself. They said there was nothing that would make them recommend that I took it out.