Talk of The Villages Florida
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Talk of The Villages Florida (https://www.talkofthevillages.com/forums/)
-   The Villages, Florida, General Discussion (https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/)
-   -   Is Title Insurance a scam? (https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/title-insurance-scam-157271/)

dsnrbec 07-06-2015 08:30 AM
Is Title Insurance a scam?
 
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 07-06-2015 09:06 AM
Title insurance
 
Quote:
Originally Posted by dsnrbec (Post 1083040)
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 07-06-2015 09:18 AM
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 07-06-2015 09:24 AM
All insurance is a scam until you need it.

mickey100 07-06-2015 09:25 AM
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 07-06-2015 09:27 AM
McLinn Burnsed said they would not close a transaction without it. Does anyone know of a settlement office that will?

justjim 07-06-2015 09:34 AM
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 07-06-2015 09:42 AM
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 07-06-2015 09:53 AM
Quote:
Originally Posted by dsnrbec (Post 1083066)
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 07-06-2015 09:54 AM
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 07-06-2015 10:05 AM
When we closed on our property the seller paid for the title insurance ($975.00).

NYGUY 07-06-2015 10:11 AM
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 07-06-2015 10:22 AM
I closed last sept. and did not buy title insurance,new house.

Villager Joyce 07-06-2015 10:26 AM
There are people who believe in title insurance; some don't. Nuff said?

twoplanekid 07-06-2015 10:37 AM
Quote:
Originally Posted by Dr Winston O Boogie jr (Post 1083077)
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 07-06-2015 11:12 AM
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 07-06-2015 11:26 AM
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 07-06-2015 11:32 AM
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 07-06-2015 11:45 AM
Quote:
Originally Posted by twoplanekid (Post 1083105)
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 07-06-2015 12:04 PM
Quote:
Originally Posted by Dr Winston O Boogie jr (Post 1083134)
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 07-06-2015 12:34 PM
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 07-06-2015 12:43 PM
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 07-06-2015 01:16 PM
Bought a new house last year and did not buy the title insurance either.

Quote:
Originally Posted by village dreamer (Post 1083098)
I closed last sept. and did not buy title insurance,new house.

Chatbrat 07-06-2015 01:44 PM
If you don't have a mortgage-you should not need title insurance- title insurance protects the lender from liens

dsnrbec 07-06-2015 02:12 PM
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 07-06-2015 03:22 PM
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 07-06-2015 03:44 PM
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 07-06-2015 03:45 PM
Quote:
Originally Posted by Boomer (Post 1083214)
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 07-06-2015 03:58 PM
That perfectly sums up our thinking.

Quote:
Originally Posted by graciegirl (Post 1083227)
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 07-06-2015 05:21 PM
Quote:
Originally Posted by graciegirl (Post 1083227)
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 07-06-2015 05:31 PM
Quote:
Originally Posted by Challenger (Post 1083264)
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 07-06-2015 06:56 PM
Quote:
Originally Posted by Boomer (Post 1083214)
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 07-06-2015 07:25 PM
Quote:
Originally Posted by dsnrbec (Post 1083066)
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 07-06-2015 07:42 PM
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 07-06-2015 07:51 PM
Quote:
Originally Posted by applesoffh (Post 1083316)
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 07-06-2015 07:51 PM
It was several thousand dollars.

Quote:
Originally Posted by Justus (Post 1083268)
:agree: My thoughts and experience exactly.

biker1 07-06-2015 07:59 PM
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.

Quote:
Originally Posted by applesoffh (Post 1083316)
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 07-06-2015 10:26 PM
Quote:
Originally Posted by Challenger (Post 1083264)
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 07-07-2015 08:05 AM
Here is what a lawyer friend wrote in response to an e-mail that I sent asking him about the subject.

Quote:
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 07-07-2015 08:08 AM
Quote:
Originally Posted by biker1 (Post 1083323)
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.
///


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