Is Title Insurance a scam?

[dsnrbec]

We just found out that title insurance is required by most, if not all, lawyers and settlement companies around The Villages. I don't see the need for it since The Villages purchased all the land and I'm sure did their due diligence in the purchase. Does anyone else think it's a way to collect thousands over and over again each time a property changes hands? If you know anyone who will do a closing without it, please let me know.

[alwann]

We just found out that title insurance is required by most, if not all, lawyers and settlement companies around The Villages. I don't see the need for it since The Villages purchased all the land and I'm sure did their due diligence in the purchase. Does anyone else think it's a way to collect thousands over and over again each time a property changes hands? If you know anyone who will do a closing without it, please let me know.

I agree with you. I rejected it at closing, two years ago, and believe it is another trumped up fee (Sorry, Donald), like "courier" and the like. If somebody some day files a suit over property rights, the developer will have to answer. He bought the property and subdivided it. Another thing, I read an article a while back that claimed there are only two or three title insurance companies in the U.S. They operate under a variety of names.

[CT514s]

The interesting thing is that when you purchase a new home through the developer, you have a choice about buying title insurance. When you are selling your home in TV, you are required to buy title insurance for the Buyer. The attorneys and title companies in this area tell you that this is "customary" in Florida, but that is not the case. I sold 4 properties in other parts of Florida, and was not asked or expected to purchase title insurance for the Buyers. Incidentally, the attorney and/or closing agents earn up to 40% of the title insurance premium as their "commission" for writing the policy.

[Villager Joyce]

All insurance is a scam until you need it.

[mickey100]

It is expected, but not a requirement that when you sell, the seller purchases title insurance. We did a for sale by owner and stipulated we would not pay title insurance. The buyer could purchase it on their own if they chose. They opted not to.

[dsnrbec]

McLinn Burnsed said they would not close a transaction without it. Does anyone know of a settlement office that will?

[justjim]

The State of Florida doesn't have a state income tax so they get money many other different ways. Closing costs are are much higher on a home in Florida than another State. Title insurance is a "profit making golden goose" for the Title Companies. It pays the rent!

[justjim]

OP, I always figured Title Insurance as a cost of owning property the same as Homeowners insurance. It is called Insurance and I'm sure neither of us would be without insurance on our home---although we may never use it.

[784caroline]

McLinn Burnsed said they would not close a transaction without it. Does anyone know of a settlement office that will?

The only reason a law office or title company would not close a sale if you opted NOT to buy title insurance is because the Lender requires it to cover their mortgage amount (NOTE: the mortgage amount - not the total amount of the sale. Otherwise if you are paying cash, they may make you sign a waiver that you were properly informed of the risks...so sign it then you are taking the risk.
Its a buyers concern not the sellers.

However that said, on a resale, it may be wise for the buyer to get it, but for a new home bought from the developer paying cash...I don't think it is necessary..

[Dr Winston O Boogie jr]

There are two different Title Insurances. One covers the bank and one covers the homeowner. The bank insurance is mandatory. Homeowner's is optional. I'll be closing on July 22 and I'm thinking of rejecting it.

I just looked at my paperwork. The cost for lender's title insurance is $25.00. The cost for homeowner's title insurance is $1,005. Huh? Same coverage.

[theorem painter]

When we closed on our property the seller paid for the title insurance ($975.00).

[NYGUY]

I have always believed title insurance in Florida was a racket. Where I come from, NY, you generally use a lawyer to close and that lawyer does a title search. If he screws up, you sue him for malpractice. You don't buy title insurance. There was only one title company covering about ten counties doing mainly commercial transactions. Here, you probably have 100 title companies covering every 10 counties. It's a rip off and these title companies have zero interest in you as your own lawyer would!!

[village dreamer]

I closed last sept. and did not buy title insurance,new house.

[Villager Joyce]

There are people who believe in title insurance; some don't. Nuff said?

[twoplanekid]

There are two different Title Insurances. One covers the bank and one covers the homeowner. The bank insurance is mandatory. Homeowner's is optional. I'll be closing on July 22 and I'm thinking of rejecting it.

I just looked at my paperwork. The cost for lender's title insurance is $25.00. The cost for homeowner's title insurance is $1,005. Huh? Same coverage.

You are correct about the two Insurances. As my lawyer friend says, you always want to avoid paying lawyer fees for litigation. I don’t believe the Developer would be of any help and certainly don’t want to sue them( The Developer) as they have more money to spend on lawyers than I . So, I added the personal one which was around $327.

[Challenger]

Spent 40 years in Community Banking- Primary business was financing homes.

My advice is buy owners title insurance . Yes, the incidence of title problems is relatively infrequent, but when a problem arrises, it can be incredibly expensive. Most claim costs are for attorneys fees to protect your ownership position.

Take advice from a real estate attorney, not neighbors and friends , who have no real knowledge of the subject. Free legal advice is usually worth what is paid for it.

Full disclosure= I am not an attorney.

[mgcsooner]

Generally, lending institutions require it if you are financing the purchase, but if not it's up to you. Past experience I have had is the lender's policy is very priced low for THEIR COVERAGE, figuring you are going to buy it too. If you decline, the lender still requires it and the closing amount you are required to pay is drastically increased and it is still only covering them.

Also in some states (TX) the price of the policy is dictated by the state.

[JCMSr]

I personally would not purchase any real estate without obtaining Title Insurance. Over the years I have experienced on two separate occasions a problem with property titles which resulted in a claim against said policies. The first one had to do with back taxes owed on the undeveloped lot by the developer who was no longer in business. Rather than create an insurance claim the closing attorney paid the back taxes himself to clear the matter up. The second time was much more involved and had to do with a condominium we owned in Georgia. In this case, the original condominium documents were so screwed up by the original owner's attorney they had to be completely rewritten and refiled. This took over a year for the title insurance attorneys to straighten out and provide us with a clear title without exceptions. I have never seen a situation where Owner's Title Insurance was mandatory. Banks, on the other hand will always require title insurance for the amount of the loan to protect their interest. As someone has already stated, most insurance is a waste of money until you need it!

[Dr Winston O Boogie jr]

You are correct about the two Insurances. As my lawyer friend says, you always want to avoid paying lawyer fees for litigation. I don’t believe the Developer would be of any help and certainly don’t want to sue them. So, I added the personal one which was around $225.

If they sold me a house that they don't own the title to, I certainly would want to sue them.

[Challenger]

If they sold me a house that they don't own the title to, I certainly would want to sue them.

and well you should. But there are many title defects that go undiscovered for many many years . I have enoiuntered illegal conveyences dating back more than 50 years. Sometimes by people not even in the chaim of ownership.

[CT514s]

Recently we tried to sell our house on our own. Contacted 3 different closing agents, including McLin and ALL three would not close without title insurance. In my former life I worked as a Real Estate Paralegal and while I certainly understand the benefits to title insurance, I have never heard of a closing agent requiring it. It just seems unjust that they will close new construction without it, but mandate it for a resale. Seems to be only in this area.

[dsnrbec]

Yes, that is what I am finding out as well. I was a Realtor in VA and never experienced this kind of requirement. I can't help but think they all agreed to take the same stand which probably violates some kind of anti-trust law.

[biker1]

Bought a new house last year and did not buy the title insurance either.

I closed last sept. and did not buy title insurance,new house.

[Chatbrat]

If you don't have a mortgage-you should not need title insurance- title insurance protects the lender from liens

[dsnrbec]

It's true you don't have to buy it when purchasing a new house but if you are selling a previously owned home, you WILL be required to purchase it for the buyer. Still looking for someone to do a closing without it, but coming up empty.

[Boomer]

AAAAAUGH!!! It makes me crazy when I hear people say that cash buyers do not need title insurance.....

There are two kinds of title insurance. Lender's title insurance covers the bank for the amount of the mortgage. Of course, a bank requires it of the borrower. But as the mortgage amortizes, the bank's interest becomes less and less.

BUT.....Owner's title insurance covers the buyer for the entire amount paid for the house and stays with the buyer throughout ownership of the insured property.

The reason it makes me crazy when people say cash buyers do not need title insurance is because.....Hellooooooo, when you are buying a house for cash YOU are the bank. I would be protecting my investment in the house, just like a bank would do.

So anyway, if you do not want to buy owners title insurance because you are a cash buyer who is willing to assume total risk for your investment in your house, that is your prerogative. But please, please, please stop telling people that cash buyers do not need title insurance.

Give a Google to Owners Title Insurance and do a little reading. The cost of sleep varies.

(Full disclosure: I am speaking of title insurance in general, nothing specifically about Florida or TV. I know that who pays what where can be different from state to state. And I am not a lawyer. My rant is about advice that might not be so good. Something as simple as a typo in an old deed or an old mortgage that was not released, like happens sometimes with family mortgages, could have the power to bring down the house if it shows up years later and people cannot be found to sign affidavits and quit claims and such. Oh My!)

[Vladimir]

I would never go without title insurance regardless of whether it was all cash or financed. I as a buyer always paid for title insurance and if I was selling my house here in Florida I would stipulate that the buyer pays one way or another - why should I pay for his coverage?

[graciegirl]

AAAAAUGH!!! It makes me crazy when I hear people say that cash buyers do not need title insurance.....


There are two kinds of title insurance. Lender's title insurance covers the bank for the amount of the mortgage. Of course, a bank requires it of the borrower. But as the mortgage amortizes, the banks interest becomes less and less.

BUT.....Owner's title insurance covers the buyer for the entire amount paid for the house and stays with the buyer throughout ownership of the insured property.

The reason it makes me crazy when people say cash buyers do not need title insurance is because.....Hellooooooo, when you are buying a house for cash YOU are the bank. I would be protecting my investment in the house, just like a bank would do.

So anyway, if you do not want to buy owners title insurance because you are a cash buyer who is willing to assume total risk for your investment in your house, that is your prerogative. But please, please, please stop telling people that cash buyers do not need title insurance.

Give a Google to Owners Title Insurance and do a little reading. The cost of sleep varies.

(Full disclosure: I am speaking of title insurance in general, nothing specifically about Florida or TV. I know that who pays what where can be different from state to state. And I am not a lawyer. My rant is about advice that might not be so good. Something as simple as a typo in an old deed or an old mortgage that was not released, like happens sometimes with fairly mortgages, could have the power to bring down the house if it shows up years later and people cannot be found to sign affidavits and quit claims, and such. Oh My!)



We have purchased two NEW homes in The Villages for cash. We have chosen to not buy title insurance.


With all the folks buying here and all the sturm und drang about every little thing, we have yet to hear anyone got burnt on a new home that the developer owned the land previously.


I am not advising anyone to pass on it. We have ALWAYS purchased title insurance on all homes in the past.


I figure the developer was crossing his t's and dotting his I's.

[biker1]

That perfectly sums up our thinking.

We have purchased two NEW homes in The Villages for cash. We have chosen to not buy title insurance.


With all the folks buying here and all the sturm und drang about every little thing, we have yet to hear anyone got burnt on a new home that the developer owned the land previously.


I am not advising anyone to pass on it. We have ALWAYS purchased title insurance on all homes in the past.


I figure the developer was crossing his t's and dotting his I's.

[Challenger]

We have purchased two NEW homes in The Villages for cash. We have chosen to not buy title insurance.


With all the folks buying here and all the sturm und drang about every little thing, we have yet to hear anyone got burnt on a new home that the developer owned the land previously.


I am not advising anyone to pass on it. We have ALWAYS purchased title insurance on all homes in the past.


I figure the developer was crossing his t's and dotting his I's.

Problem is that it doesn't matter if the Developer crossed the Ts and dotted the i s if some one previously in the chain of ownership made a fraudulent conveyance or was incompetent at the time of conveyence, or had a faulty meets and bounds description. Why take a chance for a few hundred dollars in a six or seven figure purchase?

[Justus]

Problem is that it doesn't matter if the Developer crossed the Ts and dotted the i s if some one previously in the chain of ownership made a fraudulent conveyance or was incompetent at the time of conveyence, or had a faulty meets and bounds description. Why take a chance for a few hundred dollars in a six or seven figure purchase?

:agree: My thoughts and experience exactly.

[NYGUY]

AAAAAUGH!!! It makes me crazy when I hear people say that cash buyers do not need title insurance.....

There are two kinds of title insurance. Lender's title insurance covers the bank for the amount of the mortgage. Of course, a bank requires it of the borrower. But as the mortgage amortizes, the bank's interest becomes less and less.

BUT.....Owner's title insurance covers the buyer for the entire amount paid for the house and stays with the buyer throughout ownership of the insured property.

The reason it makes me crazy when people say cash buyers do not need title insurance is because.....Hellooooooo, when you are buying a house for cash YOU are the bank. I would be protecting my investment in the house, just like a bank would do.

So anyway, if you do not want to buy owners title insurance because you are a cash buyer who is willing to assume total risk for your investment in your house, that is your prerogative. But please, please, please stop telling people that cash buyers do not need title insurance.

Give a Google to Owners Title Insurance and do a little reading. The cost of sleep varies.

(Full disclosure: I am speaking of title insurance in general, nothing specifically about Florida or TV. I know that who pays what where can be different from state to state. And I am not a lawyer. My rant is about advice that might not be so good. Something as simple as a typo in an old deed or an old mortgage that was not released, like happens sometimes with family mortgages, could have the power to bring down the house if it shows up years later and people cannot be found to sign affidavits and quit claims and such. Oh My!)

It's nice to have a well written understandable post....thank you Boomer!!!

[NIPAS K-9]

McLinn Burnsed said they would not close a transaction without it. Does anyone know of a settlement office that will?
Must be new i didnt have too

[applesoffh]

Sorry, but I'll never understand how people can pay hard earned money to purchase a home here, or anywhere for that matter, and not spend a little bit more to insure a clean title. This topic has come up in the past and it amazes me that people still ask. I was an apartment dweller in NYC and now I'm a homeowner here, and I would never have purchased without Title insurance. Why on earth take a chance on your most expensive possession?

[Challenger]

Sorry, but I'll never understand how people can pay hard earned money to purchase a home here, or anywhere for that matter, and not spend a little bit more to insure a clean title. This topic has come up in the past and it amazes me that people still ask. I was an apartment dweller in NYC and now I'm a homeowner here, and I would never have purchased without Title insurance. Why on earth take a chance on your most expensive possession?

In many cases it is because they received bad advice on sites like this from posters who have no real knowledge of the subject.

[biker1]

It was several thousand dollars.

:agree: My thoughts and experience exactly.

[biker1]

Insurance is a calculated risk. Why pay for something if the odd of needing it are very remote. I choose to self insure a lot of things. In the case of buying a new home in The Villages, the odd of needing title insurance is very remote. With a resale, the odds are different. The title insurance was very pricy - several thousand dollars.

Sorry, but I'll never understand how people can pay hard earned money to purchase a home here, or anywhere for that matter, and not spend a little bit more to insure a clean title. This topic has come up in the past and it amazes me that people still ask. I was an apartment dweller in NYC and now I'm a homeowner here, and I would never have purchased without Title insurance. Why on earth take a chance on your most expensive possession?

[CFrance]

Problem is that it doesn't matter if the Developer crossed the Ts and dotted the i s if some one previously in the chain of ownership made a fraudulent conveyance or was incompetent at the time of conveyence, or had a faulty meets and bounds description. Why take a chance for a few hundred dollars in a six or seven figure purchase?
Exactly. It happened to us in NJ in a development. The problem went back to before the land was even acquired by the developer. And it wasn't on every single house around us, either--just our house and one or two others. We all had title insurance. Someone made the problem go away. This was in the mid '80s, and I don't remember exactly what happened.

[Dr Winston O Boogie jr]

Here is what a lawyer friend wrote in response to an e-mail that I sent asking him about the subject.

1. Owner’s Title Insurance is a waste of money, UNLESS you end up needing it, such as is the case with many insurances! Titles are examined by “people” and sometimes they make mistakes and overlook something that they should have discovered which affects the validity of your title and/or the security interest of the Lender, or perhaps imposes a lien on the property which must be satisfied before it can be later conveyed, or a house is built over, or too near, the boundary line, etc. The Lender’s Title Insurance Policy covers the Lenders’ interests, but does “nothing” for you.



2. I do not know about “zero”, but It is probably accurate that there is not a great chance that there will ever be an issue with the title of a new home sold by The Villages; however, it is not “unthinkable.” [ I think it is fair to mention in this regard that there is a “close” relationship between the developer, the builders, Properties of the Villages and the myriad of separate legal entities involved in the development, construction and sale of Villages homes.] Title issues can include not only matters related to the “chain of title” but also things such as matters of survey, zoning, unpaid liens, easements, covenants, failure to get all heirs of an estate to convey their interest in large tracts of property, access to public streets, rights of ingress and egress, etc…matters which may not become an issue until years down the road [if ever]. [ Coverage of some of these matters occasionally could require special endorsements to the policy and sometimes additional premium.]



3. Truth is many residential home purchasers do not buy Owner’s insurance. Often, this is simply due to the cost; or they mistakenly believe that somehow the Lender’s Policy provides them some protection or comfort. The vast majority, probably well over 95%, of homebuyers never have a title claim, regardless of whether the Seller is The Villages or some other developer, in which case the owner’s title insurance premium would have been a waste of money, if you discount peace of mind.



4. All of the above being said, even if you decide to purchase an Owner’s Policy, it is extremely important to know what it covers and what it does not. The pre-printed boiler plate language on the policy cover sheets generally apply to all policies. However, the “Schedules”, i.e., inserts into the policy, can contain “exclusions and “exceptions to coverage, and, as a practical matter, can negate the benefit of the policy.



Case in point: I had an investor come to me several years ago who had purchased two (2) side-by-side condos from the same seller and had purchased Owner’s policies for each. One of the Condos, for some inexplicable reason, had access to the nearest public street and the adjacent condo did not. The investor believing that she was fully covered as to such matters by virtue of having purchased the policies, apparently at closing did not read the “Exceptions” Schedules contained in the Policy related to the Condo unit which did not have public access…it was expressly excepted from coverage under that policy….Naturally, the corporate Seller had since dissolved and was no longer around to respond to the issue.


Morale of the story: If you buy an owner’s policy, be sure to ask for a draft prior to the closing; read the “exclusions” and “exceptions” from coverage and if you do not thoroughly understand them, require the closing attorney to explain...completely! If it still does not make sense, do not close until you are satisfied.

[Villager Joyce]

Insurance is a calculated risk. Why pay for something if the odd of needing it are very remote. I choose to self insure a lot of things. In the case of buying a new home in The Villages, the odd of needing title insurance is very remote. With a resale, the odds are different. The title insurance was very pricy - several thousand dollars.

///

[Dr Winston O Boogie jr]

Can anyone explain why, in my case, the bank's cost for title insurance is $25.00 and the owner's cost is $1,005? isn't it the same coverage for the same home? I am mortgaging 80% so why isn't my cost only four times theirs?

[Dr Winston O Boogie jr]

Recently we tried to sell our house on our own. Contacted 3 different closing agents, including McLin and ALL three would not close without title insurance. In my former life I worked as a Real Estate Paralegal and while I certainly understand the benefits to title insurance, I have never heard of a closing agent requiring it. It just seems unjust that they will close new construction without it, but mandate it for a resale. Seems to be only in this area.

I'm beginning to find that there are a lot of things in the way that real estate transactions are conducted with The Villages and Properties of The Villages that are "only in this area". More specifically, only in The Villages.

My sisters sell real estate up north and she is astounded with some of the things I tell her about this transaction.

[Dr Winston O Boogie jr]

and well you should. But there are many title defects that go undiscovered for many many years . I have enoiuntered illegal conveyences dating back more than 50 years. Sometimes by people not even in the chaim of ownership.

And as far as I'm concerned, that shouldn't be my problem. If the Villages (or anyone for that matter, bought a piece of property that had an issue with the title, and then sold it to me, it should be their problem for not having done their due diligence. Why should be burden and cost be on me to insure that they did their job correctly? Why should I have to pay for their mistake?

[Challenger]

Here is what a lawyer friend wrote in response to an e-mail that I sent asking him about the subject.

See post #39-- Finally someone who has the expertise to speak on a complicated subject and give a frame of reference for a very important decision . IMO flying naked on the biggest purchase most families will ever make is not clear thinking. An old adage , but still valid "penny wise and pound foolish"

[graciegirl]

And as far as I'm concerned, that shouldn't be my problem. If the Villages (or anyone for that matter, bought a piece of property that had an issue with the title, and then sold it to me, it should be their problem for not having done their due diligence. Why should be burden and cost be on me to insure that they did their job correctly? Why should I have to pay for their mistake?





Real Estate Law differs from state to state. But if you have a mortgage, the lender really dictates whether you seek clear title, and they should because in essence they own your home and they didn't seek to buy it, you did and you are asking them to borrow their money.


I would NEVER ever pass on getting Title Insurance on a resale, anywhere, ever and from any other entity, even if I were paying cash. And I am not promoting anyone else doing what we did.

[justjim]

In reality, the Government will own your house---then someone else will live in your home if you don't pay your taxes. You really are only "leasing" your home from the Government.

But leasing your home from the Government can prove to be more profitable and a better arrangement than leasing from a landlord who leases the house from the Government.

Sorry, a bit off the subject. Dr. You have no choice in the matter of title insurance when you have a mortgage on the property. The lending institution will require it. Regardless, Title insurance isn't a scam---it's insurance---and to many not a bad idea and to others an unnecessary expense. To each his own. Good luck with your new "lease"!

[Challenger]

And as far as I'm concerned, that shouldn't be my problem. If the Villages (or anyone for that matter, bought a piece of property that had an issue with the title, and then sold it to me, it should be their problem for not having done their due diligence. Why should be burden and cost be on me to insure that they did their job correctly? Why should I have to pay for their mistake?

Depends on the type of conveyence that they made to you. It may state that they are conveying only the title that they received when they acquired the property. Quite commom. Therefore many people feel compelled to do a title search amd additionally buy insurance.

Wishing , hoping, and believing are not cponcepts in Real Estate Law.

[Dr Winston O Boogie jr]

Real Estate Law differs from state to state. But if you have a mortgage, the lender really dictates whether you seek clear title, and they should because in essence they own your home and they didn't seek to buy it, you did and you are asking them to borrow their money.


I would NEVER ever pass on getting Title Insurance on a resale, anywhere, ever and from any other entity, even if I were paying cash. And I am not promoting anyone else doing what we did.

I think that you might have missed the point on two types of title insurance. One that covers the lender is mandatory. In my case, the fee is $25.00. The second type covers the homeowner. In my case it's $1005.

Technically, by law, the lender does not own the home. They have lent you the money to buy it and the buyer legally owns the home. The lender has the right to try to take possession of the property if the buyer defaults on the mortgage. But, they do not own the property. Foreclosure is a long legal process. You basically put up the home that you own as collateral.

[Dr Winston O Boogie jr]

In reality, the Government will own your house---then someone else will live in your home if you don't pay your taxes. You really are only "leasing" your home from the Government.

But leasing your home from the Government can prove to be more profitable and a better arrangement than leasing from a landlord who leases the house from the Government.

Sorry, a bit off the subject. Dr. You have no choice in the matter of title insurance when you have a mortgage on the property. The lending institution will require it. Regardless, Title insurance isn't a scam---it's insurance---and to many not a bad idea and to others an unnecessary expense. To each his own. Good luck with your new "lease"!

How is it that so many of you missed the point about there being two types of title insurance? One that covers the lender and one that covers the owner. The one that covers the lender is mandatory and much less expensive than the one that covers the owner.

[JohnN]

It's a scam on new homes, there's no past title on a vacant lot.
Existing homes seem to need it

[RVRoadie]

There are two different Title Insurances. One covers the bank and one covers the homeowner. The bank insurance is mandatory. Homeowner's is optional. I'll be closing on July 22 and I'm thinking of rejecting it.

I just looked at my paperwork. The cost for lender's title insurance is $25.00. The cost for homeowner's title insurance is $1,005. Huh? Same coverage.

I think you will find that the bank policy is $25 extra. If you don't get title insurance, the bank policy will be $1,005.

[Villager Joyce]

call any title insurance company in any county and ask for a quote for title insurance. ask them to explain to you about the simultaneous issue mortgagee policy. also ask them to explain how liens against an owner can attach to the property. call any real estate agent in the state of florida and ask them about the standard contract to sell real estate in florida. all contracts have a standard clause that states the seller provides a title insurance policy unless the contract states otherwise. i guess what confuses me is someone is willing to pay $200,000 for a home but not $1000 to guarantee good title. if you want to know what attaches to vacant land, go to the courthouse and ask if you can look at an abstract of title which shows all the documents prior to the land being developed. it is not a villages or mclin scam.

[biker1]

This is where I believe it gets complicated. The developer bought a large tract of land and then divided into a large number of lots. If there was a problem with the title of the large tract of land then presumably every lot has a problem. At that point, there is presumably a large legal problem because potentially thousands of lot would be involved. Presumably there would be a large class action law suite. I did not buy title insurance on my new house because I don't believe there is much chance of that happening. On a resale, there could be a number of issues with the title that someone missed (liens, problems with a will, divorce issues, etc.) and therefore title insurance makes more sense. Essentially, I am betting that the developer's purchase of the large tract of land that contains my new home was done cleanly because there was so much at stake. Perhaps I am naive - time will tell.

It's a scam on new homes, there's no past title on a vacant lot.
Existing homes seem to need it

[Challenger]

It's a scam on new homes, there's no past title on a vacant lot.
Existing homes seem to need it

100 per cent incorrect statement . Read the quote from atty in post 39.

[Allegiance]

Is it public knowledge what percentage of your title premium goes toward paying claims? It appears kickbacks are the biggest title company expense. Politicians will not touch an industry that greatly benefits lawyers.

[jblum315]

I refinanced my mortgage in January and Quicken Loan did purchase title insurance and I had to pay for it They said it is necessary when selling or refinancing.

[Dr Winston O Boogie jr]

call any title insurance company in any county and ask for a quote for title insurance. ask them to explain to you about the simultaneous issue mortgagee policy. also ask them to explain how liens against an owner can attach to the property. call any real estate agent in the state of florida and ask them about the standard contract to sell real estate in florida. all contracts have a standard clause that states the seller provides a title insurance policy unless the contract states otherwise. i guess what confuses me is someone is willing to pay $200,000 for a home but not $1000 to guarantee good title. if you want to know what attaches to vacant land, go to the courthouse and ask if you can look at an abstract of title which shows all the documents prior to the land being developed. it is not a villages or mclin scam.


What's confusing me is why the buyer should have to insure himself against bad title. If something goes wrong with the title down the road, shouldn't that be the responsibility of the seller?

If I buy a car from a dealer and find that there's something wrong with the title, would the dealer not have to give me another car?

If I put an air conditioning system in my house and the compressor blows after a week, is it not the responsibility of the seller or installer to replace it?

It maybe the law and it may be standard practice, but it is a scam. It should be up to the owner of anything to insure that what they are selling is what they say it is.

[dewilson58]

What's confusing me is why the buyer should have to insure himself against bad title. If something goes wrong with the title down the road, shouldn't that be the responsibility of the seller?

If I buy a car from a dealer and find that there's something wrong with the title, would the dealer not have to give me another car?

If I put an air conditioning system in my house and the compressor blows after a week, is it not the responsibility of the seller or installer to replace it?

It maybe the law and it may be standard practice, but it is a scam. It should be up to the owner of anything to insure that what they are selling is what they say it is.

It could be the sellers' responsibility down the road..........but where is that seller when you need him/her. Out of state?? Out of country?? Heaven?? Since you are now working with a "dealer" like a car......it just becomes more difficult.

[Jayhawk]

When you are REQUIRED to purchase title insurance, it is only because you are mortgaging the property. You are protecting the lender, which is only fair. If you own free and clear, you are NOT required to buy the title insurance. It would be a risky move to refuse it, but if you can withstand the loss of your money and home, it's your call as the buyer.

[TNLAKEPANDA]

Why would the seller pay for the Title Insurance??? That should be a choice of the buyer if they want protection. I never heard of a seller paying.

[Jayhawk]

Why would the seller pay for the Title Insurance??? That should be a choice of the buyer if they want protection. I never heard of a seller paying.

Happens all the time when the buyer gets a mortgage. Often a seller will pay closing costs, and this is one of the higher cost items.

[Dan9871]

What's confusing me is why the buyer should have to insure himself against bad title. If something goes wrong with the title down the road, shouldn't that be the responsibility of the seller?



It depends. In some parts of the country, like New England, the only kind of deed you can get is a Quit Claim deed. What you are paying for when a buy a property in this case is for seller give up their right to claim that they own the property. In this case the buyer takes on all the risk of the title not being clear.

Since there is no way to know if there was some obscure land grant or a mistake in the recording of a deed the seller or buyer might want to purchase title insurance to cover their liability if something like that happens. But as always it depends on how the laws of the state treat the sale of property and what the seller an buyer agree to.

When we lived in Massachusetts there were a few instances where home some owners end up with ownership issues because 200 years before some Indian lands were not properly accounted for. I forget the ultimate outcome but I remember that those property owners were not able to sell their properties for years.

[Dr Winston O Boogie jr]

It could be the sellers' responsibility down the road..........but where is that seller when you need him/her. Out of state?? Out of country?? Heaven?? Since you are now working with a "dealer" like a car......it just becomes more difficult.

Actually, I think that it becomes less difficult with a big dealer like The Villages. do you think that they're not going to be around in 20-30 years?

It might be much more difficult if you bought from a private party. As you say, where are they? If you're dealing with a contractor that has only built a few homes and has only been business for a short while you might have a big problem.

Of course as my lawyer friend has stated, many things can be written into contracts and most of us don't understand half the papers we're signing at a closing. You could very well be signing a contract that absolves the seller of any liability should a title issue come up in the future.

Laws may be made by our representatives, but they are heavily influenced by lobby groups like insurance companies. I wouldn't be at all surprised if some of these laws were written by insurance company lobbies who then made huge contributions to campaigns.

And don't forget, up until a few years ago, lobbyist could legally take our government reps on various junkets designed to pedal their influence.

I don;t want to turn this into a political discussion, but just because something is a law doesn't always mean that it's right or in the best interest of the people.

In the final analysis, I'll probably go along and pay for the title insurance, knowing that I've been taken. There comes a point where you just have to protect yourself because people who are supposed to be protecting you don't.

[Challenger]

call any title insurance company in any county and ask for a quote for title insurance. ask them to explain to you about the simultaneous issue mortgagee policy. also ask them to explain how liens against an owner can attach to the property. call any real estate agent in the state of florida and ask them about the standard contract to sell real estate in florida. all contracts have a standard clause that states the seller provides a title insurance policy unless the contract states otherwise. i guess what confuses me is someone is willing to pay $200,000 for a home but not $1000 to guarantee good title. if you want to know what attaches to vacant land, go to the courthouse and ask if you can look at an abstract of title which shows all the documents prior to the land being developed. it is not a villages or mclin scam.

My experience after a career in community banking , largely financing homes , is that advice from real estate agents is often erroneous or incomplete regarding contract and title issues. For the overwhelming majority of people a real estate attorney should be involved and their advice should be heeded. Title insurance is definitely not a scam. Without owners insurance, in case of a problem , that bank would be protected and the owner could possibly loose all equity and or the property.

[Villager Joyce]

My experience after a career in community banking , largely financing homes , is that advice from real estate agents is often erroneous or incomplete regarding contract and title issues. For the overwhelming majority of people a real estate attorney should be involved and there advice should be heeded.

Agree 100%. Real estate attorney. But I feel the people who are convinced title insurance is a scam will believe all attorneys just perpetuate the scam.

[Challenger]

Agree 100%. Real estate attorney. But I feel the people who are convinced title insurance is a scam will believe all attorneys just perpetuate the scam.

And yes there are some attorneys who are greedy.

[Carla B]

Hi Villages residents,

My name is Christal Hayes and I'm a reporter for the Orlando Sentinel. I'm working on a story about roundabouts that are popping up around the area and wanted to get your view on them. Do you like them? Are they easy to drive through? Do you see other drivers navigating them incorrectly?
Feel free to email me- Chayes@orlandosentinel.com

Cristal: This thread is about title insurance. If you wish to discuss roundabouts, you can either start a thread with that topic or do a SEARCH on "roundabouts." There is a wealth of reading there. Good luck.

[dewilson58]

Actually, I think that it becomes less difficult with a big dealer like The Villages. do you think that they're not going to be around in 20-30 years?

It might be much more difficult if you bought from a private party. As you say, where are they? If you're dealing with a contractor that has only built a few homes and has only been business for a short while you might have a big problem.

Of course as my lawyer friend has stated, many things can be written into contracts and most of us don't understand half the papers we're signing at a closing. You could very well be signing a contract that absolves the seller of any liability should a title issue come up in the future.

Laws may be made by our representatives, but they are heavily influenced by lobby groups like insurance companies. I wouldn't be at all surprised if some of these laws were written by insurance company lobbies who then made huge contributions to campaigns.

And don't forget, up until a few years ago, lobbyist could legally take our government reps on various junkets designed to pedal their influence.

I don;t want to turn this into a political discussion, but just because something is a law doesn't always mean that it's right or in the best interest of the people.

In the final analysis, I'll probably go along and pay for the title insurance, knowing that I've been taken. There comes a point where you just have to protect yourself because people who are supposed to be protecting you don't.

Agree. Didn't know you were talking about buying from TV. I thought your "seller" reference was more generic. Most homea are purchased from an individual rather than a company, so I went down a different path.

[JayGeeFL]

If it's a requirement by the seller to pay/buy title insurance , then the developer should have had to pay when selling the homes to the 1st buyer. How do the title companies not insist on them paying, but only on subsequent sales ? ...

[Villager Joyce]

If it's a requirement by the seller to pay/buy title insurance , then the developer should have had to pay when selling the homes to the 1st buyer. How do the title companies not insist on them paying, but only on subsequent sales ? ...

Because TV does not use the standard FARBAR contract. It isn't a trquirement. Tbe standard contract calls fir the seller to provide title unless the contract provides otherwise. TV probably doesn'trovide because they have done their homework and know title is good. But errors do happen.

[GOJODO]

I think everyone is jumping over the details that may influence your decision. First, consider what the title insurance policy covers. Here is a good article from the American Land Title Association describing the products http://www.alta.org/about/TitleInsuranceOverview.pdf The second issue is for you to look closely at your deed to confirm that the seller is warranting the title and will defend you should that warrant not be true. Also, you will want to be certain the seller is economically sound and will be around when you need them in the future. If your satisfied as to these points you may not need the insurance. Remember the most typical benefit from title insurance is they pay the legal bills to establish your title, this is far more the benefit than people actually loosing title. If you are buying your property from the Villages, not a re-sale, and you clearly within the Villages planned subdivision , you may not need it. It really depends on your tolerance for risk. Good Luck.

[Challenger]

I think everyone is jumping over the details that may influence your decision. First, consider what the title insurance policy covers. Here is a good article from the American Land Title Association describing the products http://www.alta.org/about/TitleInsuranceOverview.pdf The second issue is for you to look closely at your deed to confirm that the seller is warranting the title and will defend you should that warrant not be true. Also, you will want to be certain the seller is economically sound and will be around when you need them in the future. If your satisfied as to these points you may not need the insurance. Remember the most typical benefit from title insurance is they pay the legal bills to establish your title, this is far more the benefit than people actually loosing title. If you are buying your property from the Villages, not a re-sale, and you clearly within the Villages planned subdivision , you may not need it. It really depends on your tolerance for risk. Good Luck.

I believe that the deed from The Villages is a Warranty Deed not a Special Warranty Deed. If so they are only conveying the title that they were deeded when they acquired the property. If I am correct any previous defects in title are still in existence.

Would you pay $1000 to insure your home against fire forever.

About $1000+- will insure that you have clear title (or defend attacks) for the entirety of your ownership

[doti Browning]

We just found out that title insurance is required by most, if not all, lawyers and settlement companies around The Villages. I don't see the need for it since The Villages purchased all the land and I'm sure did their due diligence in the purchase. Does anyone else think it's a way to collect thousands over and over again each time a property changes hands? If you know anyone who will do a closing without it, please let me know.

I wish I had an answer other than there are so many residents involved that I have to wonder why every individual continues to pay for this high priced "policy" when there is more than one forum for all involved to attempt to stop it. I also wonder if residents have tried in the past. Years ago I had the option to skip this non-insurance. Today you cannot just have your bank do the closing. They insist on selling you the policy instead. Greed.

I have purchased 2 houses this year and am selling 1 at the moment. I am faced with paying again for a policy to sell a house I titled 6 months ago, albeit at a reduced fee. My question has been has ANYONE ever heard of a homeowner collecting on a policy when there was an error on the title? Never. I don't believe I'd spend the anguish to try. So besides the fact a title here almost has to be clear (unless you installed something partially on your neighbor's property)it's misleading to market as an insurance policy. dB

[CFrance]

We wouldn't buy a house without title insurance. There were many problems with people's property in MI caused by history of prior ownerships--farmers, tribes, etc.

In NJ we were the ones with the problem due to sketchy past ownership. Title insurance took care of it in that if a previous owner ever came back at the property, we were covered.

[doti Browning]

The only reason a law office or title company would not close a sale if you opted NOT to buy title insurance is because the Lender requires it to cover their mortgage amount (NOTE: the mortgage amount - not the total amount of the sale. Otherwise if you are paying cash, they may make you sign a waiver that you were properly informed of the risks...so sign it then you are taking the risk.
Its a buyers concern not the sellers.

However that said, on a resale, it may be wise for the buyer to get it, but for a new home bought from the developer paying cash...I don't think it is necessary..


Some confusion here. these are 2 different insurances. Lenders have always required mortgage insurance. Title non insurance, as I call it, is separate.

[zonerboy]

In regard to new homes in The Villages purchased from the developer, I'm not sure the word scam applies, but some one is making a lot of easy money from an essentially captive audience. All the homes on my street were once part of the same parcel and this parcel was purchased by the developer whom I'm sure ascertained he had clear title to the property before developing it. So do each of the 60 homes in my courtyard villa neighborhood need a separate thousand dollar title insurance policy? And since the developer surveyed the lots before building the homes do we each have to pay for an additional survey?
Just asking?
In addition most of us purchased these homes via The Villages realtor, mortgaged with The Villages mortgage company, and settled via The Villages title company. Lots of bucks to be made.

[doti Browning]

The only reason a law office or title company would not close a sale if you opted NOT to buy title insurance is because the Lender requires it to cover their mortgage amount (NOTE: the mortgage amount - not the total amount of the sale. Otherwise if you are paying cash, they may make you sign a waiver that you were properly informed of the risks...so sign it then you are taking the risk.
Its a buyers concern not the sellers.

However that said, on a resale, it may be wise for the buyer to get it, but for a new home bought from the developer paying cash...I don't think it is necessary..


Some confusion here. these are 2 different insurances. Lenders have always required mortgage insurance. Title non insurance, as I call it, is separate.

[dewilson58]

In regard to new homes in The Villages purchased from the developer, I'm not sure the word scam applies, but some one is making a lot of easy money from an essentially captive audience. All the homes on my street were once part of the same parcel and this parcel was purchased by the developer whom I'm sure ascertained he had clear title to the property before developing it. So do each of the 60 homes in my courtyard villa neighborhood need a separate thousand dollar title insurance policy? And since the developer surveyed the lots before building the homes do we each have to pay for an additional survey?
Just asking?
In addition most of us purchased these homes via The Villages realtor, mortgaged with The Villages mortgage company, and settled via The Villages title company. Lots of bucks to be made.

Wish I would have thunk it up first.

[doti Browning]

All insurance is a scam until you need it.
I find almost no one thinks through the cost of insurance and simply buys no matter what they might get for it. On the 1 hand we have to have medical insurance on the chance you might suddenly be faced with astronomical charges. At the other extreme there is appliance insurance. Can no one imagine that these companies have it figured out how much to charge for a policy and how much they will pay out. How do you think they make money? They charge you more upfront than they have needed to pay out. We have been trying for weeks to get a clothes dryer fixed through insurance purchased by the former homeowner ( I have never bought insurance on any gadget). Sears will only use rebuilt parts. They don't necessarily work either. A week between each ordered rebuilt part has us at 3 weeks in the laundromat now.
Title Insurance: A title search which we are charged separately for makes some sense. So called title insurance no person can ever collect on.

[su2009]

I have an active California law license and have handled numerous cases where a title insurance policy was the only thing that stood between the homeowner and bankruptcy; for an example of one of my cases where title insurance was crucial to my clients (Mrs. & Mrs. Hays) search Google for "Hays vs. Vanek".

If your neighbor claims your house violates the setback law and is 4 inches too close to his or her house, you will need your title insurance company to step in and defend you - and to pay legal bills that could run a hundred thousand dollars or more, not to mention paying the cost of tearing off the roof and the wall of your house to move your wall further in, and to compensate you for your home's lost value, if you lose; remember that the time allowed by law for you to sue the developer over this will likely have expired.

If a utility decides it wants to run an enormous cable under your home, you will need your title insurance company to defend your claim to your property and compensate you for the value of your home if you lose. If Sumter County, Lake County, or Marion County claims it has the right to widen the street behind, next to, or in front of your house and take most of your yard in the process, you will need your title insurance company to defend you and compensate you for your home's lost value if you lose.

'Not to mention that if you decide to refinance your existing mortgage, or take out a new mortgage, or get a reverse mortage, you will be out of luck without title insurance - no lender will touch your home loan application. And when you try to resell your house, intelligent buyers will want a steep discount since a title insurance policy guarantees that you have good title to the home you are selling, and they will have trouble getting a title insurance policy on a house that doesn't currently have one. Most title insurance companies will only issue policies at the time you buy the property - you will find it difficult to impossible to get one later.

Personally, I would never, ever go without title insurance, and I'd advise clients to avoid buying a house where the owner was so reckless or so poorly advised that they went without their own title insurance policy. It's a one-time purchase that could end up keeping you out of poverty some day. - Suuzen Ty Anderson

[fmdjr1950]

Not required. Bought three homes in TV and have declined in all three.
The developer did all the homework or would have not bought the property.

[occhrissea]

The lender requires title insurance and you have to get owners in order to get lenders which is why lender's is so cheap.

[GPGuar]

Not required. Bought three homes in TV and have declined in all three.
The developer did all the homework or would have not bought the property.

I agree, maybe somewhere else but in the villages as posted above the developer did their homework!

[Gonzo]

In answer to your thought that lenders or mortgage insurance cost $25.00 is that it only costs $25.00 when an Owners Policy is purchased.

[Villager Joyce]

In answer to your thought that lenders or mortgage insurance cost $25.00 is that it only costs $25.00 when an Owners Policy is purchased.

Yes. It is a simultaneous issue policy.

[NavyNJ]

Some confusion here. these are 2 different insurances. Lenders have always required mortgage insurance. Title non insurance, as I call it, is separate.

Uhh....I think you might be the confused one on this. A "Lender's Policy" when discussing Title Ins. is not at all the same as "Private Mortgage Ins." or PMI. The former insures the Lendor's interests in the event there is a challenge to the property TITLE; the latter insures the Lendor's interests from Mortgagee's default when less than 20% downpayment is made on the property.

And, for the record, Su2009 has supplied the most accurate and on point argument for always taking out Title Ins., regardless of who one is purchasing from.

[cymar]

Coming from the UK I used a lawyer when I closed in 1993/4. My son had bought from a developer in Houston and susequently ran in to boundary problems. The lawyer provided Title insurance, and did not charge anything else for services.
I would not expect to pay for title insurance again when I eventually sell the property.

[Challenger]

Uhh....I think you might be the confused one on this. A "Lender's Policy" when discussing Title Ins. is not at all the same as "Private Mortgage Ins." or PMI. The former insures the Lendor's interests in the event there is a challenge to the property TITLE; the latter insures the Lendor's interests from Mortgagee's default when less than 20% downpayment is made on the property.

And, for the record, Su2009 has supplied the most accurate and on point argument for always taking out Title Ins., regardless of who one is purchasing from.

I have never heard of an attorney who has signifigant experience in real estate law recommend that a buyer forgo Title Insurance. Sevral have posted or been quoted on this thread and their comments strongly support purchase.