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My husband and I have bought and sold many homes, all as company relocations with moving expenses, realtor fees etc, paid for by hub's company.
We are moving again and will be closing on a house the end of this month. Title insurance will cost us $3300, and it is an expense his new company does not reimburse. We don't remember ever spending such a large amount previously. (Perhaps his previous companies had paid for the title insurance, or perhaps it wasn't so expensive, we just don't remember.) I have googled to try to understand exactly what we would be getting for $3300, because that is quite a chunk of money. The house we are buying is 4 years old, and we are buying from the original owner.
I'd like to just skip it, which our realtor said we can do, but that it is not advised. If there is any kind of problem with the title, wouldn't that problem fall back on our seller? Or is there any way we can research the title ourself?
The only way any issues would fall back on the seller are if you get title insurance. If you have no insurance on the property, you would be responsible for any claims that attach to the title. Otherwise, the title companies will take care of anything that comes up. Even with proof that a certain claim isn't meant for you, it's still a mark on the title and those are hard to remove without the insurance company getting it done for you.
And, what you don't understand is that it's not necessarily for something on the title right now. What if the sellers did some contract work on the house, and after closing, those contractors put a lien on the house because they claim they never got paid. If you have insurance, it goes away. If you don't have insurance, guess who is stuck with clearing that lien from the title. You are, and who knows the amount of month the contractor will claim you owe.
In Texas, the owner's title policy is a negotiable thing, but 99% of the time, it's traditionally paid for by the seller to ensure clear title to the buyer (except builders who don't like to pay it, but will if negotiated).
The only way any issues would fall back on the seller are if you get title insurance. If you have no insurance on the property, you would be responsible for any claims that attach to the title. Otherwise, the title companies will take care of anything that comes up. Even with proof that a certain claim isn't meant for you, it's still a mark on the title and those are hard to remove without the insurance company getting it done for you.
And, what you don't understand is that it's not necessarily for something on the title right now. What if the sellers did some contract work on the house, and after closing, those contractors put a lien on the house because they claim they never got paid. If you have insurance, it goes away. If you don't have insurance, guess who is stuck with clearing that lien from the title. You are, and who knows the amount of month the contractor will claim you owe.
In Texas, the owner's title policy is a negotiable thing, but 99% of the time, it's traditionally paid for by the seller to ensure clear title to the buyer (except builders who don't like to pay it, but will if negotiated).
That example, about a contractor not having been paid, is one I've heard several times now. But if it's the previous owner who didn't pay a bill, why would that become my problem? Wouldn't the contractor go after the person who signed the agreement to have the work done? I don't have any agreement with any contractor. I'm not trying to be argumentative, I just don't understand that. And I don't understand why the title insurance would be so outrageously expensive! It costs more than twice as much as our homeowners insurance. Seems to me that hail or fire or burglary would be more likely than a title problem (based only on personal experience of knowing numerous people who have had those types of homeowners insurance claims, and I've never known a single person with a title insurance claim.)
I don't want to take a foolish risk, but I need more convincing that title insurance is worth $3300 of my hard-earned money.
(BTW the house we're buying is in TX, but the sellers didn't want to pay for the TI. We didn't push, because we erroneously assumed hub's company would pay for it along with all the other closing costs.)
That example, about a contractor not having been paid, is one I've heard several times now. But if it's the previous owner who didn't pay a bill, why would that become my problem? Wouldn't the contractor go after the person who signed the agreement to have the work done? I don't have any agreement with any contractor. I'm not trying to be argumentative, I just don't understand that. And I don't understand why the title insurance would be so outrageously expensive! It costs more than twice as much as our homeowners insurance. Seems to me that hail or fire or burglary would be more likely than a title problem (based only on personal experience of knowing numerous people who have had those types of homeowners insurance claims, and I've never known a single person with a title insurance claim.)
I don't want to take a foolish risk, but I need more convincing that title insurance is worth $3300 of my hard-earned money.
(BTW the house we're buying is in TX, but the sellers didn't want to pay for the TI. We didn't push, because we erroneously assumed hub's company would pay for it along with all the other closing costs.)
If he gets a judgment in court, a contractor will put the lien on the property, rather than try to chase down the deadbeat owner.
Getting paid at sale of property is as good a bet as collecting from a deadbeat, or a broke owner.
And generally if you buy a home with a lien, you are buying the lien. Just a little "bonus."
I don't want to take a foolish risk, but I need more convincing that title insurance is worth $3300 of my hard-earned money.
Keep in mind this is a one-time premium, whereas your homeowners policy is a recurring item.
Also, I don't know about Texas, but in New York, premiums for title insurance are "fixed", so shopping around wouldn't help. (And buyers always pay the premium.)
Personally, I would never buy a house without it. Have heard too many stories from others about "I wish I had bought it".
Remember, a property isn't just the brick and mortar you call 'home' but it is the boundary and land it happens to sit on, and that is what title insurance is insuring, claims and interests upon the property. Whether its a lien, easement rights, encroachment - those are claims and interest on a property which affect title. All policies are not alike and you want to review just what coverage is being provided so do compare and contrast coverage and costs. Personally, don't just get 'basic coverage' go for at least extended coverage.
There can many things which can affect title, no matter if it seems 'low risk', there is still present that operative word - risk. I always advise title insurance.
Given that the property is 4 years old you are interested in, the first question to ask the title insurance companies is that if there a re-issue rate available, which may cut the cost down. Also, being so young, (not knowing exactly the specifics you are intending to purchase) I would be inclined to double check and verify that the lot/land was broken up correctly in order to build the current residence! I've seen mistakes happen and it can be very costly to correct!
If you have a mortgage, your lender will require title insurance.
That amount does seem high to me. I wonder if that is the cost of everything the title company is doing: the search, document preparation, etc. Since you must pay for it, can you search for other title companies with a lower rate?
If you have a mortgage, your lender will require title insurance.
That amount does seem high to me. I wonder if that is the cost of everything the title company is doing: the search, document preparation, etc. Since you must pay for it, can you search for other title companies with a lower rate?
You are right, the lender does require TI, but we are not paying for that portion (I forget if we have to pay it or if hub's company is paying it).
And yes, that amount does seem high. I've been reading articles online, and one said something about TI costing upwards of $1000. I thought to myself, "I'd just pay it if it were only a thousand bucks!" We are making a significant down payment on this house (much more than on previous homes), so perhaps that is why it is so expensive. Is it relative to the down payment? It actually represents about 1% of our down payment.
We've just about decided that we'd better get the TI. I didn't previously realize that we could shop around; I thought we had to go with whatever title company was selected (and I don't even know if it was the realtor or the relocation company who selected this title company----this whole aspect of home buying is a foggy mystery to me, but I'm trying to get educated!)
I was reading a NY Times article that talked about a company in Connecticut, that operates on online title insurance company, called Entitle. I'm going to check details and rates with them. Anyone familiar with that company?
There is a formula to title insurance, which recently changed, so go to the website of the title company you're using and all the premiums are there. If the premium itself is $3300, that means you're buying a house around $500,000. If that $3300 includes the escrow fee of about $300, and the lender's policy which is about $300, and the recording fees and courier fees, and all those title company fees, you're talking about a house at about $375-400k.
Either way, title insurance is regulated in the state of Texas and everyone's the same amount per $1000 sales price. So, no, you can't shop around as it's a waste of time. It's the same price everywhere.
Last edited by FalconheadWest; 03-18-2014 at 09:59 AM..
There is a formula to title insurance, which recently changed, so go to the website of the title company you're using and all the premiums are there. If the premium itself is $3300, that means you're buying a house around $500,000. If that $3300 includes the escrow fee of about $300, and the lender's policy which is about $300, and the recording fees and courier fees, and all those title company fees, you're talking about a house at about $375-400k.
Either way, title insurance is regulated in the state of Texas and everyone's the same amount per $1000 sales price. So, no, you can't shop around as it's a waste of time. It's the same price everywhere.
OK, thanks for that info. Do you happen to know, are reissue rates allowed in Texas? I read about that several places online. Here's a clip from one such article:
Ask your settlement attorney whether you are eligible for a “reissue rate.” To be eligible, you will need to prove that the home’s title has been insured within the previous 10 years. Ask your sellers how long ago they bought the home. If it’s 10 years or less, ask whether they purchased owner’s title insurance when they bought. If so, ask them for a copy of their owner’s policy and deliver it to your settlement attorney.
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