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Started By
Message
Title Insurance - yea or nay?
Posted on 2/25/20 at 2:52 pm
Posted on 2/25/20 at 2:52 pm
Is title insurance really worth the money? Looking at a 15+ year old house, established neighborhood, 2 previous owners, no foreclosures.
Is there really much of a risk that warrants the extra money for insurance?
Is there really much of a risk that warrants the extra money for insurance?
8
Posted on 2/25/20 at 4:21 pm to upgrayedd
Isn’t it required for a loan?
Posted on 2/25/20 at 4:37 pm to upgrayedd
Is flood insurance necessary if you don't live in a flood zone? Could you still flood under the right conditions?
All insurance is the same. You want peace of mind, or want to roll the dice? Yeah maybe you save a few bucks not paying premiums and maybe it pays off and nothing happens. But what if...?
FYI, title insurance is a one time premium at closing. Will cover you the entire time you own it. It's one of the cheapest insurances out there for what it will cover.
There's been lots of threads on it on this board recently. Lots of good discussion if you can find them.
All insurance is the same. You want peace of mind, or want to roll the dice? Yeah maybe you save a few bucks not paying premiums and maybe it pays off and nothing happens. But what if...?
FYI, title insurance is a one time premium at closing. Will cover you the entire time you own it. It's one of the cheapest insurances out there for what it will cover.
There's been lots of threads on it on this board recently. Lots of good discussion if you can find them.
Posted on 2/25/20 at 4:56 pm to 632627
quote:
Isn’t it required for a loan?
It was required item for the lender. Owner title insurance is optional.
Posted on 2/25/20 at 5:10 pm to upgrayedd
If you don't want your interest in the house covered in case of a title defect then by all means, don't get title insurance.
Posted on 2/25/20 at 5:11 pm to upgrayedd
Has anyone ever heard of a real situation where someone used their Title Insurance? I personally think it’s a scam for the Title attorneys to make money.
Posted on 2/25/20 at 6:17 pm to Skippy1013
quote:
Has anyone ever heard of a real situation where someone used their Title Insurance?
This is really what I'm interested in
Posted on 2/25/20 at 6:23 pm to upgrayedd
Yes.
That trap is only an 1" wide, but a mile deep.
ETA: Make sure you get the kind that covers your equity, not just the payoff.
That trap is only an 1" wide, but a mile deep.
ETA: Make sure you get the kind that covers your equity, not just the payoff.
This post was edited on 2/25/20 at 6:25 pm
Posted on 2/25/20 at 6:57 pm to VetteGuy
Yes ..... more than once
First example: I know a guy that makes a living looking for unpaid slivers of property that when property sold over and over fell into cracks and ended up as a parcel with tax issues. He picks up the property at auction and then becomes part of the mineral owner depending on situation.
I know first hand a person that bought a condo that was originally a Hugh complex and was redone. The redo was mis measured???? And a few units were set up on record wrong .....when a surveyor did an official review they had a few feet of property not in their legal descrption. End result is a guy came in and bought the few feet of a couple of the unit in a tax auction. This guy owned the back of a few closets. Of course he could not do anything with them and the unit owners told him to frick off .......
Until !!!!! They wanted to sell their unit.
Then he had some legal way to stop the sell and held them all for ransom... wanted like 30 k for the sliver which cost him a few hundred in tax payment.
One owner did not go through the title insurance company and paid cash for the unit....they had to buy the guy off with their cash.... another person had gone through a title insurance company.... the title company had to pay the ransom
First example: I know a guy that makes a living looking for unpaid slivers of property that when property sold over and over fell into cracks and ended up as a parcel with tax issues. He picks up the property at auction and then becomes part of the mineral owner depending on situation.
I know first hand a person that bought a condo that was originally a Hugh complex and was redone. The redo was mis measured???? And a few units were set up on record wrong .....when a surveyor did an official review they had a few feet of property not in their legal descrption. End result is a guy came in and bought the few feet of a couple of the unit in a tax auction. This guy owned the back of a few closets. Of course he could not do anything with them and the unit owners told him to frick off .......
Until !!!!! They wanted to sell their unit.
Then he had some legal way to stop the sell and held them all for ransom... wanted like 30 k for the sliver which cost him a few hundred in tax payment.
One owner did not go through the title insurance company and paid cash for the unit....they had to buy the guy off with their cash.... another person had gone through a title insurance company.... the title company had to pay the ransom
Posted on 2/25/20 at 7:23 pm to VABuckeye
Ehh.... lender will have the firepower on their side.
Posted on 2/25/20 at 7:31 pm to upgrayedd
Yeah, title issues pop up pretty frequently. People try to do their own weird planning and they mess up previous conveyances. It's usually a good investment
Posted on 2/25/20 at 7:46 pm to upgrayedd
I would not pay any real money for a property without title insurance. It is a cheap one time price for peace of mind.
Posted on 2/25/20 at 9:16 pm to upgrayedd
Typically the seller buys the owners policy and you’re responsible for the lenders policy, but the lenders policy is very cheap ($250 or so) since you get a concurrent rate. If you don’t get an owners policy, you’ll pay full price for the lenders policy.
Posted on 2/26/20 at 4:01 am to upgrayedd
Yes. My father had some land that he was holding as collateral for a loan. The person he loaned the money to (my dads brother) defaulted, so my dad sold the land. My dads brother is contesting the sale saying that my dad was never to have sold the land.
The person that bought the land (my cousin) is covered through title insurance. My dad has had to pay for court costs it out of pocket because he didn’t have title insurance.
The person that bought the land (my cousin) is covered through title insurance. My dad has had to pay for court costs it out of pocket because he didn’t have title insurance.
Posted on 2/26/20 at 5:03 am to Skippy1013
quote:
Has anyone ever heard of a real situation where someone used their Title Insurance? I personally think it’s a scam for the Title attorneys to make money.
This is totally the truth. The odds of there being some sort of claim or lien on the title is so ridiculously small that getting insurance for it every time is pretty ridiculous.
The older a property or the more checkered its history (like gone through a foreclosure or something) then it might make sense.
It being a default thing that everyone pays for every purchase is a result of lawyers doing what lawyers do.
This post was edited on 2/26/20 at 5:07 am
Posted on 2/26/20 at 6:03 am to Neauxla_Tiger
quote:Bad example. Some houses (like mine) are situated where flooding isn't going to happen. The only way my house will flood is if the majority of the world's cities will be underwater. The insurers will be underwater too.
Is flood insurance necessary if you don't live in a flood zone? Could you still flood under the right conditions?
Posted on 2/26/20 at 8:16 am to upgrayedd
From prior threads (links below) on the issue:
Owner's policy for a home?
Do you buy title insurance?
quote:
Have a friend who paid cash for a lot and built a 400k house on it in BR, no title insurance. A year later, someone popped up and it turned out the claim was legitimate. He had to pay another 100k to keep his house.
quote:
Yes. It’s relatively cheap compared to attorney fees you would incur if some nut sues because that was granpapas farm, and he was the secret illegitimate love child who should have inherited it. Or a neighbor sues over the boundary, etc.
That stuff is unlikely, but boy did it start happening when the Haynesville Shale hit. Many nutty cases were filed by wannabe descendants who claimed interests in land.
Pay a few hundred now, and be insured forever. Or risk paying $400 an hour for a couple of years to litigate with a nut.
quote:
I'm an attorney who works in real estate. Trust me you want to buy Title Insurance, it's pretty cheap and worth it's weight in gold. Nothing is more unbelievable than having someone come in with a property issue because they didn't buy title insurance for a 100k plus investment.
quote:
A La. attorney was just suspended two years because he faked deeds that ended up causing a nightmare for buyers.
That's the kind of thing the best title check in the world may not uncover. So get insurance.
quote:
Yes. Get it. People seldom need to make a claim, but if they do, the policy is a huge money-saver on legal fees alone.
If some nut shows up and claims your house is on his grandpappy's old farm and he was left out of the succession, your neighbor beefs over the boundary, or similar, you're covered and get representation.
quote:
Owner's title insurance is very cheap considering what it can save you. Especially fi you already have mandatory lender's title insurance, then it is discounted a good bit. And it's not monthly, it's just paid once at closing. Also FYI, it's state regulated and scales with the purchase price
It's the same as any insurance. You don't need it until you do.
Some people think they don't need it because there was already a title search, or they know the former owner owned it for 20 years and didn't have any issues. But none of that guarantees anything. Here's some examples of what could easily come up, which title insurance would help you with:
- Title company just flat misses clearing a judgment against the seller
- A lien is filed on the house a couple days before closing. Depending on your parish/county, many clerks of court are backlogged and don't have their online index totally up to date. The title company should update their title search as much as possible, but if the clerk is a week+ behind, there's a risk there was something recently filed that you don't see until you've already closed.
- Some things can't be discovered by a title search, such as a fraud or forgery in the chain of title. The title company isn't hiring handwriting experts to verify every signature in the chain.
- Even if the current owner bought the house new and there are no prior owners, there could still be issues with the ownership of the land...which I'm pretty sure has been there for a while.
- As someone mentioned earlier, if there's a crazy uncle who shows up saying he was left out of a succession then at the very least you've got a headache messing with your peace of mind. At worst, he's taking you to court and showing he owns a 1/3 interest in your house.
- A neighbor builds his fence partway on your land, or some other boundary dispute It's the biggest purchase most people make in their lifetime. Why not spend a one-time fee to guarantee you won't have your life ruined by some unforeseen mishap?
Owner's policy for a home?
Do you buy title insurance?
Posted on 2/26/20 at 8:25 am to Skippy1013
quote:
Has anyone ever heard of a real situation where someone used their Title Insurance? I personally think it’s a scam for the Title attorneys to make money.
Won;t go into details, but I'm in a situation right now. shite may hit the fan and I'll be glad I bought the title insurance.
Posted on 2/26/20 at 9:20 am to Skippy1013
quote:
I personally think it’s a scam
Sure. Then homeowner's insurance, car insurance, health insurance are all scams too. "I'm a great driver, why would I need car insurance?" Personally, I don't think your family's home is something you want to be cheap and penny pinch on. But hey, if ya'll want to live on the wild side, go for it. Just do yourself a favor and read up on this stuff before making an ignorant decision. I used to work in this field and saw issues pop up left and right. Just because you don't personally know a person that had a problem doesn't mean they don't occur.
Posted on 2/26/20 at 9:28 am to Asharad
I gave that example simply to illustrate that even if the odds of a particular disaster happening are low it can still happen and ruin your life. Plenty of people weren't in flood zones during those 2016 floods. Plenty weren't in flood zones prior to Katrina.
It's also important to remember the low likelihood of something is already priced into these policies. If you're not in a flood zone, flood insurance is only like $3-400/year. Same thing with title insurance: the likelihood of something happening is low, therefore it only costs around $700ish to insure a $400,000 house for your entire lifetime. That's dirt cheap, especially the longer you live there
ETA: Title insurance scales with purchase price. A $200,000 house is only around $380 for an owner's policy (assuming there's a lender's policy too). I just don't get why anybody wouldn't get it at that price. You spend that much every month just eating out.
It's also important to remember the low likelihood of something is already priced into these policies. If you're not in a flood zone, flood insurance is only like $3-400/year. Same thing with title insurance: the likelihood of something happening is low, therefore it only costs around $700ish to insure a $400,000 house for your entire lifetime. That's dirt cheap, especially the longer you live there
ETA: Title insurance scales with purchase price. A $200,000 house is only around $380 for an owner's policy (assuming there's a lender's policy too). I just don't get why anybody wouldn't get it at that price. You spend that much every month just eating out.
This post was edited on 2/26/20 at 9:38 am
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