Posted by IB (NJ) on December 21, 2004 at 16:01:36:
I think was Ed was asking the question in response to the poster of the horror stories when he ended his post with ‘ask me how I know’.
Do you REALLY need Owner’s Title Insurance ? - Posted by JamesPrincipale
Posted by JamesPrincipale on December 21, 2004 at 04:42:06:
I am in the middle of purchasing title insurance for a property I am buying. The owner of the house bought it in 1980. He now owns it free and clear. I know I have to buy LENDER’s title insurance for the mortgage company, but what about OWNER’s (Fee) title insurance? Is it really necessary. Do I really need it. Why do I need it?
Re: Do you REALLY need Owner’s Title Insurance ? - Posted by John Katitus
Posted by John Katitus on December 22, 2004 at 01:53:19:
I don’t think you’ve received a good answer yet. In any kind of insurance there are horror stories about why you need it. Lender’s and Owner’s policies here in Ohio cost $3 and $5 per thousand, respectively. Your question is whether the extra $2 per thousand is justified by the increased coverage.
My brother is Vice President of Lending for a major bank. He tells me that Title Insurance is a joke and almost never pays off. He cites all the exclusions and fine print included in the policy and speaks from experience. I personally don’t know because I have never had a problem. I hope someone knowledgeable can answer.
Yes, you do . . . - Posted by Lisa
Posted by Lisa on December 21, 2004 at 15:14:12:
I agree with the other posts here. There are many, many things that can go wrong. I’ll even fess up here and give you a personal story.
I purchased a house several years ago ‘subject to’. I did a title search, but never purchased title insurance. I actually meant to, but I just plain old forgot. I had a tenant/buyer in the house for over 2 years. They eventually bought the home and I took my money and we were done, or so I thought.
Just this last year, my old buyer went to re-fi her house and when they did a title search, they found a new lien from the city against the property. It was from way back, before I even bought the house.
Someone had to pay that lien, which was $6,ooo. I had made promises to my seller, and I was not about to go back on them (even though our deal happened several years ago). Because I didn’t purchase title insurance, I was responsible for the debt. If I had purchased title insurance, that policy would have paid the lien off, instead of me.
Lesson Learned: (at least for me) NEVER buy a house without title insurance, EVER!
Please, protect yourself. Good Luck!
Lisa
Re: Do you REALLY need Owner’s Title Insurance ? - Posted by RDLAZO
Posted by RDLAZO on December 21, 2004 at 13:05:20:
Follow up. As the name implies, this part of title insurance is customarily paid by seller/owner.
Unless you (buyer) agree to pay for it, seller should pay.
Good luck,
RDLAZO
Re: Do you REALLY need Owner’s Title Insurance ? - Posted by Ask me how I know
Posted by Ask me how I know on December 21, 2004 at 06:50:34:
Boundary disputes are one type of claim that title insurance will cover. There were two recent cases where the buyer did not get title insurnace but should have. One was a vacant piece of land that has had the same legal description for about 80 years. Prior to buying the property was surveyed and a certified survey was provided to the buyer. Several years later a neighbor claimed that they owned the entire property and that the property in question was somewhere else. They hired an attorney and have threatened a lawsuit. The buyer is upset and not thrilled at the prospect of spending thousands of $ to defend.
In another recent case here buyer bought a large tract of land. After purchasing got a survey and discovered that the neighbors driveway and building are on the subject tract.
In another case a builder bought a vacant lot between two existing houses. turns out the neighbor’s driveway and garage are on the subject property. The neighbor defends his right to the garage even claiming adverse possession. The delays cost the builder time and money. He finally builds away from the neighbor’s garage and by doing so prevents himself from building a garage on his property due to the side setbacks.
Another time buyer buys a tract of vacant land. Years and years later a neighbor claims that it is totally his land. The neighbor is a wealthy individual, who sues and drags out a lawsuit for several years. After the buyer had spent $50,000 in legal fees, the buyer gave up and deeded the property to the neighbor for free.
And lastly buyer buys a property where the house burnt down many years earlier. At the time of the fire there was a mortgage on the property. The owner is accused, convicted and incarcerated for arson. The insurance company pays off the mortgage, but will not compensate the convicted arsonist/owner. There was no mortgage satisfaction piece recorded for what ever reason. About 20 years later when the buyer buys the property the mortgage company lost the record of the satisfaction, as this was in the days before computer records. The mortgage company demands that the buyer pay off the mortgage again WITH INTEREST.
In all of these cases there was no title insurance, but if there were the title insurance company would have either defended the claims against the property or settled the claim.
Ask me how I know.
Re: Do you REALLY need Owner’s Title Insurance ? - Posted by rdla
Posted by rdla on December 22, 2004 at 08:56:53:
John,
do you title insure and escrow your RE transactions?
Is it the bank policy where your VP brother work not to title insure and escrow his banks RE transactions? Does he advice his bank customers not to escrow and title insure their RE transactions because title ins is a joke? First time I heard Bank VP comments like this. I want to see the major banks policy and procedure on closing real estate loans where your brother work, I am 100% sure they use title and escrow cos.
The last time I check, the title insurers are bonded and insured and still regulated and supervised by the states insurance commisioners and atty generals like other insurers such as , fire and casualty, health plans, auto ins ETC. And they will really scrutinize the property for you before they let the deal close. I would rather title insure than listen to advice not to insure. Like my previous post if there is no profit in the deal to cover title insurance (joke they maybe)why do the deal, that is such a small amount to cover the risk.
I mean well to everybody specially for the newbys who might think title ins. is really a joke and therefore not use them. I will never never self insure my RE deals.
Merry Christmas to all and happy new investing year.
RDLAZO
Always use Special Warranty Deed - Posted by Rob FL
Posted by Rob FL on December 21, 2004 at 15:52:04:
Whenever you sell, always use a special warranty deed. I justify this by telling people… “I’ve only owned the property for 90 or 120 days. Why should I have to warrant the title back 200 years? I, as seller, will buy you title insurance.”
A special warranty deed. Warrants the title during your period of ownership but that is all. Banks and HUD use special warranty deeds on ALL of their transactions and nobody seems to mind.
depends - Posted by David Krulac
Posted by David Krulac on December 21, 2004 at 20:31:29:
here in Pa. the buyer pays for title insurance, even though I know in other parts of the country it is customary for the seller to pay.
Re: Do you REALLY need Owner’s Title Insurance ? - Posted by EdMorson
Posted by EdMorson on December 21, 2004 at 07:44:17:
How do you know?
Limited Warranty deed - Posted by Lisa
Posted by Lisa on December 22, 2004 at 15:02:32:
I know what your talking about. Its a Limited Warranty deed. I always use them when I sell a house. The reason I paid the lien against the property was that I made promises to my seller, and I have no intention of going back on those. I have built a good reputation where I am, and it helps me get referrals. I had a choice: the city was going to sue my seller or me or both of us. I could have easily gotten off. I protected myself. But, I didn’t want my seller getting sued. I made enough money on that deal to pay that off. I just learned a lesson is all. Title insurance is not that expensive, and its well worth it.
Lisa
Re: Always use Special Warranty Deed - Posted by delia
Posted by delia on December 21, 2004 at 19:15:26:
I’m pretty new to the world of realstate.
Can you offer me a breakdow about the special warranty deeds that banks and HUD use. Do you mean to say that sellers can use a special warranty deed instead of buying title issurance?
b coz - Posted by ask me how I know
Posted by ask me how I know on December 21, 2004 at 20:28:42:
4 of those 5 happened to me (3 this year)and one happened to a friend.
Re: Do you REALLY need Owner’s Title Insurance ? - Posted by rdla
Posted by rdla on December 21, 2004 at 08:57:00:
HOw do you know? I don’t know that’s why I buy title Insurance. Buy title insurance so you will know for sure. Always use closing agents too or escrow co.in other areas. title insurance deliver and guarantee that you are getting ownership of RE you are buying and paying for.
If there is not enough value or profit in the deal to cover title insurance from the sellers or buyers it is not a deal. Real estate always involve substantial amount of money. Your money or lenders money. I always buy title ins. I will not risk my hard earned investment money to save a few hundreds. thats part of due diligence. The more real estate experience a person have the more they believe in title insurance and closing agents in RE transactions. The more experience you have the more horror stories you hear to convince you to use title insurance. It is too complicated and too big amount involved to self insure your self. Have a Good day.
RDlazo
Re: Always use Special Warranty Deed - Posted by Rob FL
Posted by Rob FL on December 21, 2004 at 21:36:25:
Special Warranty Deeds protect the seller from warranting the title prior to the seller’s ownership of the property. There is little protection for the buyer, so title insurance is a must for the buyer to obtain. Title insurance protects the buyer, but in most locales is paid for by the seller.
Enough Said - Posted by EdMorson
Posted by EdMorson on December 22, 2004 at 03:39:51:
There is nothing more to add