posted on June 22, 2002 04:27:33 PM
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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 04:58:14 PM
The chances of needing it are very low- just like the chances of needing insurance for totalling your car are very low.
But can he afford to lose the whole ball of wax? Because if there is ever a question with the title that is what is likely.
My inlaws in Ohio lived in the same house for 40 some years and the lot next door was sold to a Mobster who challenged their title based on legal documents dating back to the times when the settlers were dealing with the Indians. If they had not had such insurance they would have lost everything because this crook got the court to rule that the base land grant that established the line of ownership was void. To show how crooked this was the court also ruled that it could only apply to this one case and not the thousands of other titles that would have been involved. Similar to the way the Supreme Court ruled that their giving the election to Bush was a one time only thing that set no presedent for future cases.
posted on June 22, 2002 05:04:17 PM
If your friend is borrowing to buy he probably has no choice as the lender will require the title search and insurance. It's going to be their house and they'd just hate to lose it.
posted on June 22, 2002 06:04:36 PM
the lender title insurance is different ,it only covers the mortgage amount and the value declines every year as the mortgage is paid down.
so without his own title insurance,his equity portion of the house is unprotected.
but i agree ,the chance is very low,statistic said 5.6% and mostly due to backtaxes and NEIGHBOR DISPUTES !!!
so your case of mobster is one good example.
question- can he take out title insurance later after closing or must he take it now ??
posted on June 22, 2002 06:08:15 PM
there is also this game of musical chair,many folks dont live in their houses forever and if they do and there is a title dispute,they may not lose,of course this is MAY,they may lose and lose everything they put in.
but life is such they could lose it in a storm or flood or earthquake in ca.
they said most ca residents do not have earthquale insurance,and the chance of having a major earthquake is very likely in 30 years.
insurers in texas are no longer insuring against water or mold.
think one could lose his entire house to MOLD!!!!
posted on June 22, 2002 06:19:30 PM
Have all the contractors or subs been paid? Any chance of liens being placed on the house?
[ edited by saabsister on Jun 22, 2002 06:20 PM ]
posted on June 22, 2002 06:51:23 PM
i hope so??how would he find out since title insurance co is owned by the builder?/
no one wants home depot to reclaim the roof and lowe's the garage ??
posted on June 22, 2002 07:41:16 PM
according to the title co which handles the closing,the builder has a first mortgage on the house which is just completed,nothing outstanding.
if there is unpaid bills to home depot or subcontractors ,i would think it would apply to more than one house as it is a national builder
