OT - Title Insurance - Yes or No?

[cd_davis]

New 10-month-old grandson starting to crawl, so wife wants a new house less vertical in MA.
Offer on new place in the works, but I'd like opinions on buying title insurance. For every property I've bought I always wrestle with the cost of title insurance and the real need to buy it.
Love to hear your opinions....

[josephr]

yes....its pretty cheap, and takes care of things in case of past history which may people may not have been disclosed. Last thing you want is to pay on a house for 20 years only to learn someone sold it 20 years ago who didn't have the right to sell it. Most mortgage companies also have it as a non-negotiable requirement.

[93legendti]

Yes.

[abguff]

for the low cost of the insurance and the HUGE dollar value risk I wouldn't buy a home without title insurance. It may be a one in a million chance of a problem but a problem would be devastating.

In fact I when bought out my sister's interest in a home my parents owned since 1957 I took out title insurance. You never know if some clown may have decided they have acquired a few feet of land on your side of the property line.

[austex]

Most mortgage companies won't fund you without it.

[batman1425]

^^^ This. Never been an option to go with out on any mortgage that I or my folks have had. IMO its necessary, even if your lender doesn't require it. Especially with old properties in metro areas that may have changed hands dozens of times over the years. It is surprisingly easy for title searches to miss something, again particularly so with older property where the records were still maintained on paper. I've even heard of cases of fraud where previous transfers of title were void because of missing or invalid paperwork. As the current owner, the buck stops at you for payment if an unsatisfied lean is discovered. The $1000-1500 you spend for the insurance could literally save you hundreds of K's. No brainer.

[Anarchist]

My brother in law bought a condo in Orlando (I do not control his taste!), on his second time heading down to use it he found it occupied by another group of people who had changed the locks.

It turned out they had bought through a sale by the HOA related to unpaid levies from prior owner.

My BIL had title insurance from his buy. It took two and a half years and six figures of legal fees for him to get possession of the unit he had bought. The title insurance paid - eventually - all of his costs, including rentals for when he was in Orlando and unable to occupy “his” place.

The lesson I took from this is that all of the stories you hear about Florida legal and real estate markets are true.

And also, Title Insurance should be purchased.

[BobO]

My brother in law bought a condo in Orlando (I do not control his taste!), on his second time heading down to use it he found it occupied by another group of people who had changed the locks.

It turned out they had bought through a sale by the HOA related to unpaid levies from prior owner.

My BIL had title insurance from his buy. It took two and a half years and six figures of legal fees for him to get possession of the unit he had bought. The title insurance paid - eventually - all of his costs, including rentals for when he was in Orlando and unable to occupy “his” place.

The lesson I took from this is that all of the stories you hear about Florida legal and real estate markets are true.

A lot of title agencies do only very limited investigation of potential title problems before issuing insurance. I have seen properties with very serious boundary and encroachment issues, that were noted on recorded survey maps, be issued title insurance because all available maps had not been pulled. Yes, if you take out a mortgage you should absolutely have title insurance, no, it does not guarantee you will not have major issues.

[jghall]

As mentioned, your lender will more than likely require. By chance not, absolutely should you purchase.

[54ny77]

yes, without question. it would be 1) an incredibly bad decision to not do so, and 2) see #1.

if you're paying cash, you buy an owners' policy. if you have a mortgage, you don't have an option on that. it'll be a requirement. consider: if the banks require one, so should you.

[19wisconsin64]

For 18 years I was a mortgage originator / loan officer based in MA, but did business in a lot of other states. Over the years I helped thousands of people, and got a lot of business from other professional's referrals such as accountants, attorneys, professional associations, and interestingly enough-a lot of title examiners.

Of the very few times I heard of clients stating their nightmare "I didn't buy the owner's policy" stories the worst by far was from a title examiner. The title examiner was pretty experienced, and felt they had researched the property they purchased, and they purchased it with all cash that was obtained from an inheritance. Well, the property they purchased was built on land that was never to be developed, and they lost the house and did not get a penny. The utter shame, dejection, and failure in that person's voice as they told me the story was pretty intense. They were forcefully evicted, the house torn down, the developer was bankrupt. To hear in person how someone lost the money a relative worked their entire life to earn due to one's foolishness........there are life lessons and then there are big life lessons.

So, In my opinion, yes, buy the owner's title insurance policy. You may have a little wiggle room with the price of it, if you do get to choose your conveyance / closing / title / escrow attorney.

Good luck!

[54ny77]

I might also recommend a good attorney to assist.

When we bought our place, our lawyer found an unfinished permit from about 60 years prior via physical search of local records. It should have prevented a C of O. Title co. missed it, not just for us but for the seller when they bought it years prior!

[Ken Robb]

I might also recommend a good attorney to assist.

When we bought our place, our lawyer found an unfinished permit from about 60 years prior via physical search of local records. It should have prevented a C of O. Title co. missed it, not just for us but for the seller when they bought it years prior!

This is a good reason to buy TI. Something missed years ago like a mechanic's lien will be defended/paid off by the TI Company. The cost per dollar of protection is pretty cheap. Do check what kind of policy you are buying. In Ca. we have CLTA and ALTA policies. One only covers items of record and the other covers encroachments and boundary issues.

[ripvanrando]

Buying title insurance is easy. Getting the TI company to pay is entirely different can of worms. Back RE taxes were not paid on a home I purchased and the TI would not cover.

I did not purchase TI on my current home but did buy it on previous ones.

[BdaGhisallo]

As someone who lives in a jurisdiction where ownership of land is conferred by actual physical possession of paper deeds, and where there is incomplete registration of land titles, I am curious about the cost of this title insurance. What kind of premium are we talking about? What would it cost to get it for a $500K house/land purchase, for instance?

[Ralph]

My brother in law bought a condo in Orlando (I do not control his taste!), on his second time heading down to use it he found it occupied by another group of people who had changed the locks.

It turned out they had bought through a sale by the HOA related to unpaid levies from prior owner.

My BIL had title insurance from his buy. It took two and a half years and six figures of legal fees for him to get possession of the unit he had bought. The title insurance paid - eventually - all of his costs, including rentals for when he was in Orlando and unable to occupy “his” place.

The lesson I took from this is that all of the stories you hear about Florida legal and real estate markets are true.

And also, Title Insurance should be purchased.

I don't see how Orlando is any different than other places. Someone has to do some homework when you buy a condo.

[93legendti]

In Detroit as recently as 2007-8, it used to take six months for the register of deeds to record conveniences and liens against property. You could buy a property today that had also been sold yesterday and be out of luck (other than suing the seller) - but for title insurance.

Also, a scam that homeowners in Detroit used to run was obtaining/refinancing a 1rst Mortgage on their house and then the next week obtaining another 1rst Mortgage.

Personal experience. The Title Company paid.

[pdonk]

It depends on the land registry system if it is "required". in some Canadian jurisdictions(NB and ONT for sure, maybe others) they have moved to absolute title system wherein at the current transaction everything is basically brought up to date and the government "guarantees" title.

This does not address open permits and other items that may not be fully registered on title, but is supposed to make our system safer. One thing that mortgage insurance can protect against is third party fraud on the mortgage you are taking out. In this age of scams and problems with trades, if you are doing a large reno or buying a house that has recently been renoed, it may be worth it.

[glepore]

BdA-varies from place to place, but around $1000-1500 on a 500k property, ballpark. It insures not just against lack of title but also boundary problems etc.

[alancw3]

title insurance? absolutely. if the property has transferred in the prior five years you may be entitled to a substantial reduction in premium. like 40%. and wait no one will tell you this.

hey ken robb do you have a similar experience in la jolla? i was a realtor on marco island, fl for twenty years and this is my experience.

[alancw3]

This is a good reason to buy TI. Something missed years ago like a mechanic's lien will be defended/paid off by the TI Company. The cost per dollar of protection is pretty cheap. Do check what kind of policy you are buying. In Ca. we have CLTA and ALTA policies. One only covers items of record and the other covers encroachments and boundary issues.

ken see my prior post. i am curious as to your experience in lajolla.

[BdaGhisallo]

BdA-varies from place to place, but around $1000-1500 on a 500k property, ballpark. It insures not just against lack of title but also boundary problems etc.

Interesting. Thanks.

[Ken Robb]

I was a broker in San Diego County for 36 years. As far as I know every lender for real estate loans requires title insurance for the lender for the amount of the loan. Almost every deal I saw also had title insurance protecting the buyer for the purchase price.

I didn't see many claims filed because most deals that I saw were urban properties in formal subdivisions so property lines were well established and marked. BUT: about 35 years ago it was discovered in the La Jolla Shores area EVERY lot was offset a few feet when the subdivision map was filed MANY years before. I wasn't directly involved but it came to light when one buyer took the unusual step of having a survey done when he bought a home on one of a line of identical rectangular lots along 1/2 mile on a straight street. Many of the homes involved had been sold many times since originally built. I think several title insurers who had insured one or more properties sold since the original subdivision handled the lot line adjustments at no cost to the property owners.

I remember some encroachment issues where pools, fences, sheds, etc. were built on a property adjacent to that of the people who built the encroaching improvements. On one hand I'd guess that these problems might be more common in rural areas where land parcels are irregular shapes and not part of a subdivision. On the other hand I think most buyers of such properties would demand a survey before closing the sale so buyer and seller would know exactly where the boundaries are.

[jlwdm]

This should not be a question. Buy title insurance, unless you are comfortable losing the property.

Jeff