Is Title Insurance Really Needed On All Purchases?
Is there occasions where I can skip the title insurance? I have been buying and holding rental properties and an occasional rehab flip. The insurance is a good penny and I have never had a title problem to date. I know the simple answer is "always buy the insurance" better safe than sorry. But what percentage of purchases come back to bite you? There has already been a title search isn't that a pretty good indicator in itself?
On my first RE investment (13 unit mixed use downtown 1/4 block building), I did not get title insurance. There was, of course, a title search which my RE lawyer reviewed and recommended that I not waste the $1200 on title insurance. His reason was that the building (built around 1915) had been owned by one family since the 1920's - and I was buying from that family. Thus, there was very little risk of title issues arising.
On the other hand, when selling the home we lived in for 4 years (older home, many previous owners), the new buyers seach found an unresolved tax lien on our place (from one of the previous owners) -- I was grateful we had the insurance then as it would have cost us thousands.
I guess you're safe if you do, but in certain cases may be safe if you don't. It's a risk, but that could be estimated with professional help and experience.
Oy. On that 13 unit property ESPECIALLY APARTMENTS AND COMMERCIAL always get owners title insurance. That was very risky if you saw the chain of title on one of those you would know what I mean. Depends on what and where your buying I have seen entire subdivisions taken away from homeowners because the underlying land was not owned by the builder. In most cases your ok to do that. Just let is go thats a huge profit center for attys. Man if i was the 13 unit guy id be really carefull especially in situations like the one you described
The cost of title insurance is minor. If your deal can not support the costs then you have a bad deal.
Now, you can have an existing policy updated for a reduced fee. This works when you are taking over another person's position.
You are only asking that the title policy be updated to reflect the time from when the policy was issued until the new transaction.
John
I sometimes do deals w/o title insurance, but never with out a title abstract.
In Florida it is customary for the seller to pay for title insurance, so when I am selling I just offer the abstract, not the insurance. Esp. if I am flipping and got T.I. less than a year after I bought it.
[addsig]