posted on June 22, 2002 04:00:29 PM new
a friend of mine is buying a new house from a home builder who bot the land from someone 2 years ago,
it is in a subdivision with a few hundred houses,some are already occupied with homeowners.
the homebuilder has an interest in the mortgage company and the title company.
the title company has prepared a list of extra fees for the buyer to pay on closing.
one of the fees included is title insurance of 1119.00 dollars which comes to almost 1 % of the house.
his question is -
does he need this title insurance ??which as explained to him is a one time fee good for life .
i assume this is good for life if he does not sell his house??
can this title insurance be transferred to the buyer when he decides to sell his house??
he is not sure if he needs this title insurance as one would think when land owner bot this land years ago,he must have done his title search,then comes the homebuilder who bot the land from him 2 years ago,he must have done diligent title search,then of all the houses which have been sold in that subdivision,many homeowners and their mortgage lenders have done numerous title search this way and that way by different title search company,so his question is -
what is the odd of finding title defect on this particular 120 by 90 lot with a starter home on the lot when the entire parcel of land and the indvidual lots have been searched already??
he does not know if he will sell his house someday but there will always be such possibility,so should he accept this title insurance now when he goes to closing next week??
is there such a thing as taking on title insurance later ??
lets say if he stays there for 5 years,what is the probability of title defect within that period??
it seems to me to be a waste of money>
thanks you for reading.
posted on June 22, 2002 04:24:00 PM new
he is thinking of selling his house some day on ebay,if he decides he cant afford all that insurance and warranty and extended warranty crap.
look at it-warranty,repair,protection on your washer,dryer,fridge,pc,tv set,furniture.
then flood insurance,homeowner insurance,title insurance on the house
.
then car insurance,health insurance,pet insurance,general liability insurance.
how can a person ever save and build nestegg if all the money goes to what if??
posted on June 22, 2002 08:00:44 PM new
Hi ~ I sold Real Estate ~ new home construction for a builder for 13 years.... every time a house is sold, the buyer must buy title insurance or else the mortgage company won't give a mortgage!!
If it is new construction or resale 7 years or less since last sale, buyer gets reissue rate which is less.
If buyer pays cash at settlement ... don't have to buy it but is highly recommended that they do in case someone comes from outof the past to cause problems.
posted on June 22, 2002 08:40:37 PM new
Title insurance is always a good ides. However, I have never heard of anyone charging 1119.00 for this insurance. I purchased my latest home a year ago and purchased title insurance for 200.00
Someone is making out on this deal or someone knows something about the title that you don't. I would do some investigating prior to closing on this one.
posted on June 22, 2002 10:14:41 PM new
I suppose it is possible is he is being charged for both the 'regular' title ins and the ALTA policy, but the best advice given to you so far is to have your friend go over it with a lawyer before signing the closing papers.
posted on June 23, 2002 11:04:30 AM new
my friend is paying cash for the house,so there is no mortgage lender.
the house comes to 120,000 and title insurance is 1119.00 which is close to 1 %.
since the title company is owned partially by the builder and has closed many houses built by this builder,what is the probability that out of 400 acres,a lot of 120 by 90 ft will have title defect .
when the builder bot the land,i am sure they searched the title,when indivdual homeowners bot and use a different title company,they did the search for their lot,so he is thinking of not taking out title insurance ,he think it is high 1119??
also can he take out later??
there are competitions among builders,they will list the price of a house low and make money from options,title and mortgages.
there is also another fee he questioned called escrow fee for 185,there is no money in escrow except for the 1000 deposit he made to the builder??
he knows he has to pay closing costs,but why cant they label these fees correctly??
posted on June 23, 2002 11:52:18 AM new
he has no problem paying for title search,it is the title insurance he is complaining/
see,the title company is owned by the builder and the builder bot 450 acres of the land 2 years ago to build these houses,so 2 years ago the title of the 450 acres must have been thoroughly searched .
when he asks for a breakdown of the closing cost,he did not see any title search fee,just title insurance,which tells him the title company did not have to search on a small lot when 2 years ago they have searched the entire 450 acres for the builder .
there was nothing on this lot before,the house was just completed a few days ago.
can he take out title insurance later after closing from another title company??
posted on June 23, 2002 01:17:15 PM new
I beleive he can get title insurance at any time the problem is if he say waits for a year and then trys to buy title insurance and they come back and say its not a clean title what does he do then ?
I sure wouldnt pay anyone 120k unless I was asuured the title was good
think about it all you are really buying is the title to the land..
spock here......
Live long and Prosper
posted on June 23, 2002 01:54:16 PM new
thanks,i think he has come to realise that 1119 title insurance is a way of making some money for the title insurance co,the builder and the landowner.
