Other Talk "Otterville" plus Religion/Politics

Title Insurance Help

Old 06-29-06, 09:47 PM
  #1  
DVD Talk Ultimate Edition
Thread Starter
 
Join Date: Nov 2001
Location: Beantown
Posts: 4,515
Title Insurance Help

I'm proud to say I"m on the verge of my first house. Our final walkthrough and closing is tomorrow afternoon.

I have one question, that hopefully some can offer some good advice.

Anyways. We have misc closing costs and as part of it, is Title Insurance. Our attorney says that we are required to purchase Lender Insurance to protect the bank, and there is also Buyer Insurance or something termed that that protects us. The Lender is a no brainer since we're required, and that is roughly like 950. To purchase the stuff for us, it's an additional 1 grand. Sure 1 grand is small in the overall amount we're spending, but don't want to pay if it's pretty much pointless. It's my understanding that the whole reason you pay an attorney fee, for P&S, closing etc. is to insure a clear/clean title. So, this is just really a cover your @ss on their part.

I also see where the attorney gets like 85% comission on this insurance, and this guy not being our friend, can't get a real straight answer of if we need it not.

Anyone out there with experience. We can't decide to pay it for peace of mind, or simply not "waste" the money on it.

Thanks in advance. I'm out of here tomorrow afternoon so any replies after that will just make me feel worse no matter what choice I make probably
SpaceBoy is offline  
Old 06-29-06, 11:00 PM
  #2  
DVD Talk Special Edition
 
Join Date: Oct 1999
Location: Boston, MA
Posts: 1,675
The decision is, of course, up to you and my opinion is just that (i.e. it is NOT legal advice).

Title insurance protects you against defects in the title that aren't properly recorded or are otherwise difficult to discover. You may not need it, but it could be very useful one day. I would never buy a piece of property without it. Although it is unlikely, someone else could have an easement on your property, there could be an old lien on it, etc. But, it's your money and your call.
BobDole42 is offline  
Old 06-29-06, 11:03 PM
  #3  
DVD Talk Special Edition
 
Join Date: Feb 2000
Location: Texas
Posts: 1,624
Yep, it stinks to pay it, but I would get it. You never know if some lien has been placed by a sub-contractor or someone like that.
beavismom is offline  
Old 06-30-06, 06:27 AM
  #4  
DVD Talk Godfather
 
The Bus's Avatar
 
Join Date: Aug 2001
Location: New York
Posts: 54,852
Title insurance is one way that the attorney makes a pretty big commission. I'm guessing if you are paying $1000 your house is worth about $275,000 or thereabouts. Buyer's title insurance is a one-time policy you get, you never need to get it once you refinance or anything. Paying a 0.3% premium, one-time, certainly doesn't seem to be that bad to me.

Of all the attorneys I talk to, every one makes it abundantly clear that not getting buyer's/owner's title insurance is an awful idea. Even if they didn't make money on it, it's a bad idea to not get it.
The Bus is offline  
Old 06-30-06, 08:10 AM
  #5  
DVD Talk Gold Edition
 
Join Date: Nov 2002
Location: Frederick, MD
Posts: 2,286
Wow, mine was only $400 when I bought ($145,000 townhouse at the time)...but yeah, everything I had read said to get it...cover your ass thing.
greg9x is offline  
Old 06-30-06, 08:31 AM
  #6  
DVD Talk Limited Edition
 
Join Date: Nov 2004
Location: Pleasantville - in black & white ;P
Posts: 5,970
I've bought title insurance on every property I've ever owned.

Even if you sell that house, you keep that insurance in case someone somewhere down the road sues for a defect.

Here's a scenario:

You're buying a brand new house in a brand new subdivision. No one has ever owned the house before so you're thinking you're safe and don't need title insurance. But let's say the 100 acres that developer developed were bought from John Jr when John Sr died and left them to him. Let's say that John Jr had no idea he had a sister. Sister comes back to claim her portion of the land and oops - your house is on HER land.

With title insurance, even if you lose your house, the insurance pays you what you paid for the house. (yeah you might be out appreciation) At least you can pay off the mortgage and move on relatively simply.

Without it, you still owe the bank money, but unless you can afford new land and afford to move your house - you're screwed.
mosquitobite is offline  
Old 06-30-06, 08:33 AM
  #7  
DVD Talk Ultimate Edition
Thread Starter
 
Join Date: Nov 2001
Location: Beantown
Posts: 4,515
Actually the house is around 450k, so I'm not sure if we're getting a break on it or not. He did mention he saved us a tad on it since we're first time home buyers.

No matter what the house costs, I would prefer not to pay 1k more but we decided we're going to just for peace of mind among other things.

I spoke to the attorney again this morning and decided we're just going to go ahead and pick it up. He says if we decide to refinance at any point in the future we'll save money based upon some calc. (I don't remember the details he's emailing me them over) We have a good interest rate at the moment but have a 5 year ARM so we'll refinance within that period no matter what. So it makes sense it.

Thanks for the info.
SpaceBoy is offline  
Old 06-30-06, 09:32 AM
  #8  
DVD Talk Legend
 
Join Date: Aug 1999
Location: Chicago, IL
Posts: 17,205
Must be buying a fixer for $450k in Beantown
ChiTownAbs, Inc is offline  
Old 06-30-06, 09:35 AM
  #9  
DVD Talk Ultimate Edition
Thread Starter
 
Join Date: Nov 2001
Location: Beantown
Posts: 4,515
Originally Posted by ChiTownAbs, Inc
Must be buying a fixer for $450k in Beantown
Sad but true. it's in framingham anyways, which makes it quite a bit cheaper. We really couldn't find a place much closer that was a total dump for the money, and not interested in a condo since for the cash you can't get one in the city unless you want a 1 bedroom or something. So just moving to a place conveniant to get to the city, and also a semi little city of it's own. Plus my wife works right there. (I will be soon I imagine or commuting into the city via train)

Still needs quite a bit of work though for that price. ha
SpaceBoy is offline  
Old 06-30-06, 01:32 PM
  #10  
DVD Talk Godfather
 
The Bus's Avatar
 
Join Date: Aug 2001
Location: New York
Posts: 54,852
Originally Posted by SpaceBoy
Actually the house is around 450k, so I'm not sure if we're getting a break on it or not. He did mention he saved us a tad on it since we're first time home buyers.

No matter what the house costs, I would prefer not to pay 1k more but we decided we're going to just for peace of mind among other things.

I spoke to the attorney again this morning and decided we're just going to go ahead and pick it up. He says if we decide to refinance at any point in the future we'll save money based upon some calc. (I don't remember the details he's emailing me them over) We have a good interest rate at the moment but have a 5 year ARM so we'll refinance within that period no matter what. So it makes sense it.

Thanks for the info.
The buyer's title insurance has nothing to do with you refinancing. It won't save you a penny.

However, for $450,000 the premium you are paying is pretty low. You could easily be paying $1500 or $1800.
The Bus is offline  
Old 06-30-06, 01:37 PM
  #11  
DVD Talk God
 
twikoff's Avatar
 
Join Date: Feb 2000
Location: Right Behind You!!!
Posts: 79,497
its pointless unless its ever needed.. in which case, you could be in for a world of hurt

dont even consider passing on it
twikoff is offline  
Old 06-30-06, 05:33 PM
  #12  
DVD Talk Ultimate Edition
Thread Starter
 
Join Date: Nov 2001
Location: Beantown
Posts: 4,515
Thanks for the info all.

We're back from our closing and a nice fancy dinner..

We got it just to be safe. What's another 1k on top of 450k. Zippo.



Now only to pay mortgage and what not, life is good.
SpaceBoy is offline  
Old 07-01-06, 11:40 AM
  #13  
DVD Talk God
 
kvrdave's Avatar
 
Join Date: Aug 1999
Location: Pacific NW
Posts: 86,201
I have bought places without it.

However, generally in WA the seller buys the insurance for you, so everyone tends to get it.
kvrdave is offline  
Old 07-01-06, 11:49 AM
  #14  
DVD Talk Gold Edition
 
Join Date: Jan 2001
Location: New York
Posts: 2,902
Originally Posted by kvrdave
I have bought places without it.

However, generally in WA the seller buys the insurance for you, so everyone tends to get it.
Yeah, it really depends on what state you live in for many closing/property issues.

My mother (FWIW this is in New York State) recently had a property boundary dispute that would've been much less of a big deal had she bought owner's title insurance. Part of her shed and fence was about three feet over the property line of the neighbor. It had been that way for years-- years before she bought the property herself, and only by looking at an old survey could you see the problem. Her bank didn't make a big deal out of it at all when she closed on the house (I'm sure they would've, had the neighbor's shed been over the line instead), and she didn't hear a thing about it until she got a nasty letter from her neighbor 10 years after she bought the house, telling her to tear town her shed and fence.

Long story short-- the neighbor ripped down her fence himself, they sued eachother, and now she's allowed to keep the fence/shed there until she sells or transfers the property. It's cost her more than $10K in legal bills, basically to have the same thing she had before the dispute ever started. I'd always recommend an owner's policy, just in case some bullshit like this comes up years down the road.
Dave7393 is offline  
Old 07-01-06, 12:33 PM
  #15  
DVD Talk God
 
kvrdave's Avatar
 
Join Date: Aug 1999
Location: Pacific NW
Posts: 86,201
Here is what would have happened with title insurance. It wouldn't have changed anything. In order for her to be covered on that, she would have had to purchase extended title insurance, which is more expensive, and also includes the expense of a new survey (generally) and then a title dude comes out to see if there are any encroachments. If there are, they will exclude that from the policy. So instead of having the fight now, she would have had it back then, but at least she could have opted not to purchase the place.

Generally most everything a person worries about is excluded from coverage anyway. Something comes up that was never recorded? Those things that are not recorded are automatically excluded from coverage.
kvrdave is offline  
Old 07-01-06, 02:45 PM
  #16  
DVD Talk Platinum Edition
 
Join Date: May 2001
Location: In my Home Theater- Foley, AL
Posts: 3,503
The probable reason that it is that low is there may be a reissue credit from the current owners title policy. That would reduce your cost in buying the new policy.

The benefit in buying it is if, for some reason, a lien showed up on your title after you closed and that lien gave someone else ownership rights to your home, the title insurance will kick in and pay any damages that may result.

A reissue credit basically means that, because title work has been performed on the property previously, it's cheaper for title companies to just give it a quick once-over, instead of a full-fledged search. This reduces the cost of issuing a new policy. Depending on how old the current title policy is, it may offer you some savings on your new policy. Be sure and ask about it.

Attorneys/Title companies make a fortune on them, but I would not buy a home without it!

Sonic
Sonicflood is offline  
Old 07-01-06, 04:19 PM
  #17  
DVD Talk Gold Edition
 
Join Date: Jan 2001
Location: New York
Posts: 2,902
Originally Posted by kvrdave
Here is what would have happened with title insurance. It wouldn't have changed anything. In order for her to be covered on that, she would have had to purchase extended title insurance, which is more expensive, and also includes the expense of a new survey (generally) and then a title dude comes out to see if there are any encroachments. If there are, they will exclude that from the policy. So instead of having the fight now, she would have had it back then, but at least she could have opted not to purchase the place.
The encroachment was on the "new" survey done by her title company, and it closed anyway. Would the title company make a big deal out of it if there were no encroachments on their client's (the bank's) side of the fence? (because there weren't)

Anyway, there's some legal theory (don't know what it's called, since it's not my field) that my mother's attorney used to settle this. Basically, she had been completely maintaining the property in dispute since she bought the house, as had the previous owne (for years)r. The amount in dispute was quite small-- a little more than 100 square feet, but it meant tearing town the fence and the shed.
Dave7393 is offline  
Old 07-01-06, 04:46 PM
  #18  
DVD Talk God
 
kvrdave's Avatar
 
Join Date: Aug 1999
Location: Pacific NW
Posts: 86,201
Originally Posted by Dave7393
The encroachment was on the "new" survey done by her title company, and it closed anyway. Would the title company make a big deal out of it if there were no encroachments on their client's (the bank's) side of the fence? (because there weren't)
No, there would really be nothing to trigger red flags. If there had been, you can bet the bank's underwriter would have wanted everything resolved before they did squat.

Anyway, there's some legal theory (don't know what it's called, since it's not my field) that my mother's attorney used to settle this. Basically, she had been completely maintaining the property in dispute since she bought the house, as had the previous owne (for years)r. The amount in dispute was quite small-- a little more than 100 square feet, but it meant tearing town the fence and the shed.
Adverse possession
kvrdave is offline  
Old 07-01-06, 07:50 PM
  #19  
DVD Talk Gold Edition
 
Join Date: Jan 2001
Location: New York
Posts: 2,902
Originally Posted by kvrdave
No, there would really be nothing to trigger red flags. If there had been, you can bet the bank's underwriter would have wanted everything resolved before they did squat.
Yeah, that's what I figured-- no red flags because the bank's security wasn't threatened by mom's encroachment on another lot. In any event, it was a royal pain in the ass, the whole thing. I used to work for a bank attorney several years ago, and I rememeber these kinds of issues popping up from time to time (I did hundreds of the closings themselves, but most of the title stuff was ironed out by the time the file reached the closing table, obviously)

Originally Posted by kvrdave
Adverse possession
Yep, that was it.
Dave7393 is offline  
Old 07-02-06, 10:10 AM
  #20  
DVD Talk Gold Edition
 
Join Date: Jun 2000
Posts: 2,102
I generally don't get it. It's usually a waste of money. Liens, etc. should show up in the title search. Unless you are aware of coulded title issues, I would save the $1,000 and buy a new fridge.
orangerory is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Thread Tools
Search this Thread

Archive Advertising Cookie Policy Privacy Statement Terms of Service

Copyright 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.