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Working Title (Insurance)

bitsaboutmoney.com

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Re: Working Title (Insurance)

#81

Post by xyst »

Title insurance is pure profit in some states. In Texas, the state sets the premiums and this is dependent on the home sale price [1].

In TX, for every $1 collected by title insurance companies, the insurance companies paid out roughly 1-2 cents. 98-99% profit. [2]

I have honestly contemplated setting up my own title insurance company, advertise low rate title insurance but under the table give the buyer or seller half of the premium back to them.

[1] https://tdi.texas.gov/title/Titlerates2019.html

[2] https://www.texasobserver.org/entitled-to-profit-in-texas-ti...

Re: Working Title (Insurance)

#82

Post by treis »

Scubabear68 wrote: post #52
kelnos wrote: post #20

Earlier quoted context omitted.

The question is also who will be left holding the bag. If title searches over the past 10 years have turned up nothing problematic, then likely when the flipper sells, their buyer's title search won't turn up anything either. And once their eventual buyer buys the house, it's their problem (not the flipper's) -- well, their title insurer's problem -- if a title dispute comes up later. And given that the flipper's goa…

The flipper will be left holding the bag. The 10 years of prior searches won’t help you if the last owner snubbed a contractor and had a lien slapped on the house. Or a number of other scenarios. The title company won’t issue the insurance if it finds issues like this. It will issue a list of items to clear before they will issue the insurance. It is generally up to the owner (eg the flipper) to cure the issues.

That's fundamentally why title insurance doesn't pay out much. They exclude most defects that aren't discoverable and it's easy for everyone to find the defects that are. They are providing little actual protection hence why they pay out so little of premiums as claims.

Re: Working Title (Insurance)

#83

Post by formerly_proven »

gumby wrote: post #69

The last time I bought a house (this was in California) I read the title insurance policy (as the author says, it's short). Turns out it protects my claim in perpetuity meaning that when I sell the property I am still covered against any claims later brought by the buyer or their insurance company. Obviously therefore I don't need the insurance: in the very unlikely case title might be challenged I can always just su…

> So basically I was required to pay an extra few hundred bucks for nothing. A true "junk fee".

Over here it’s 2% plus 5% transfer tax plus generally 3.5% for the realtor (matched by the seller).

Re: Working Title (Insurance)

#84

Post by travoc »

csours wrote: post #80

Bureaucracy is, among other things, Someone Else's Moat. As in, Title Search and Title Insurance could be treated as a Public Good and administered by a government entity (shock, horror!). But people are making a lot of money off of it, so there is a bureaucratic moat.

One of the reasons the title insurance market exists is because governments can’t even reliably record title events in a timely manner. Putting them in charge of risk management would only make it worse.

Re: Working Title (Insurance)

#85

Post by sdwr »

eadmund wrote: post #59
pjc50 wrote: post #45

> Many people, when they learn about land trusts, immediately assume that something extremely hinky is going on. Not so much; this is an extremely common way for savvy people to own property. It is in no way a loophole. I'm inclined to disagree with this. One of those "not everyone doing it is up to no good, but everyone who is up to no good is definitely doing it" things. Obscuring ownership makes it a lot easier to…

> One of those "not everyone doing it is up to no good, but everyone who is up to no good is definitely doing it" things That applies to breathing, eating, sleeping: not everyone who breathes is up to no good, but everyone who is up to no good is definitely breathing!

You really can't trust those dirty breathers. Always moving air through their nose and/or mouth

Re: Working Title (Insurance)

#86

Post by RecycledEle »

gumby wrote: post #69

The last time I bought a house (this was in California) I read the title insurance policy (as the author says, it's short). Turns out it protects my claim in perpetuity meaning that when I sell the property I am still covered against any claims later brought by the buyer or their insurance company. Obviously therefore I don't need the insurance: in the very unlikely case title might be challenged I can always just su…

The Statute of Limitations might make "in perpetuity" mean a few years.

I doubt you could sue the previous owner's insurance policy.

Re: Working Title (Insurance)

#87

Post by dpifke »

ensignavenger wrote: post #78
dpifke wrote: post #77

I regret paying extra for buyer's title insurance on my home. (In my state, this is separate from the lender's title insurance policy.) I got sued a week after closing by someone with a meritless claim against the sellers, whose lawyer admitted they only added me to the suit "to put pressure on to settle." I paid over $10k in legal fees and got $0 back from the insurance policy. (The claims against me were dismissed…

You paid ten grand in legal fees for a suit that was summarily dismissed? Sounds like not only were you fleeced by the title insurance co, you were fleeced by your attourney too! Maybe there is some reasonable explanation for the high fee, but I am having trouble thinking of what it might be.

Lawyers' time isn't free, and even if you're in the right, it still takes time and money to get a judge to agree with you. South Dakota is like most states, where the expectation is that each of the parties to a lawsuit is responsible for their own costs and fees, regardless of who wins.

"Fun" coda to this story was that about 9 months into the lawsuit, the Plaintiff and his family got hit with an unrelated Federal Civil Rights lawsuit. They own a hotel a few miles from my house, and instituted a blanket ban on Native Americans on the premises, because—in their words—"you can't tell the good Indians from the bad Indians." They put this policy (and their rationale behind it) in writing, if that gives you a hint as to the sort of legal masterminds we were up against.

Re: Working Title (Insurance)

#88

Post by Scubabear68 »

anonfordays wrote: post #72
Scubabear68 wrote: post #49

Earlier quoted context omitted.

What if the latest owner has a contractor’s lien on the house for an unpaid bill? Or if they are beyond on their property taxes? Or going through a messy divorce? Or get an unexpected large medical bill that finalizes as a financial judgement against them? Clean title from other owners tells you only a limited story. The current owners can completely trash the title but still have an existing mortgage.

>What if the latest owner has a contractor’s lien on the house for an unpaid bill? Not covered by title insurance. >Or if they are beyond on their property taxes? Specifically not covered by title insurance. >Or going through a messy divorce? Not covered by title insurance, nor would this scenario matter since the owners are known. >Or get an unexpected large medical bill that finalizes as a financial judgement again…

None of what you state is accurate. What the title -search- will do is show you all of these cases which need to be cleared before insurance is issued.

Title insurance is not about the insurance, it’s about the scan.

Re: Working Title (Insurance)

#89

Post by Scubabear68 »

SkyPuncher wrote: post #58
Scubabear68 wrote: post #49

Earlier quoted context omitted.

What if the latest owner has a contractor’s lien on the house for an unpaid bill? Or if they are beyond on their property taxes? Or going through a messy divorce? Or get an unexpected large medical bill that finalizes as a financial judgement against them? Clean title from other owners tells you only a limited story. The current owners can completely trash the title but still have an existing mortgage.

The tax stuff is all public record - easily verifiable. Deaths are also generally publicly verifiable. The rest of the stuff would essentially require intentional fraud by the seller. You’d be able to recoup most of those costs via court. Annoying for a private individual, but I tolerable as part of a portfolio. I’ll be real, you can pretty quickly tell the type of person you’re dealing with in a home sale. The peopl…

“Public record”. Yes.

Now tell me how you find the public record. When much of it is not on the internet?

Re: Working Title (Insurance)

#90

Post by Scubabear68 »

Geeek wrote: post #67
Scubabear68 wrote: post #47

Earlier quoted context omitted.

I disagree. Title insurance requires highly localized specialty agents from the municipality up to the county to the State to Federal. The rules in Hunterdon County, NJ are completely different from Detroit, MI and are different from Ossining, NY. If you paid a guy in CA to run a title search in Hunterdon County, you’d be in a world of hurt. Because most of our records are at various Hall of Records. Even when comput…

As someone’s who is pretty enmeshed in the RE industry, I never heard of title searches being done locally or by a local agent. 90% of it is automated by the 3 big underwriters and the rest, should something specific come up, gets dealt with by some low rank title co employee.

Automated how exactly, when so many Counties in the US are not online?
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