OfflineThe Title Insurance Policy
The title insurance policy, unlike most insurance policies, covers past events. For example, the daughter of a previous owner claims that her father conveyed a deed while not mentally competent, the current ownership may be in jeopardy. The title insurance company will defend the claim and pay for any damages (usually the value of the property). The policy does not cover claims based on events that occur after the policy is issued. Furthermore, the policy usually contains numerous exceptions, such as claims based on information undisclosed to the title company. Thus, if you are aware of any potential problems that might lead to a claim, your failure to disclose this information to the title company will lead to a denial of a claim based on those events.
Ask for a "Re-issue" Rate
A title insurance coverage starts from ancient history and ends from the date you transferred title. Since most transfers are insured by a title company, the longer you own the property, the more the policy costs. Consider this: if you buy a property and the transaction is covered by title insurance, then you sell it six months later, what are the chances that something went wrong in the last six months? The answer is that the chances are slim to none, so the risk of a claim against the title are slim to none. For this reason, title companies offer a "re-issue" rate. The re-issue rate is a discounted price (usually about 40%) on the title insurance policy if another policy from a title company was issued on the same property within the last few years. The rate is lower because any claims that arise from events before the previous owner are covered by the previous policy. Thus the new policy really deals with the risk of claims from events that occurred while you owned it.
Try a "Hold-Open" Policy
If you are buying a property with the intent of re-selling it within a year, ask the title insurance company for a "hold-open" policy. For a small fee (usually an additional 10% on the policy), the title company will hold a title commitment open for a year or more. Rather than issue a policy based on the first transfer (from the seller to you), they will issue a policy on the second transfer (from you to the next buyer). Since the seller usually pays for title insurance, you can pay the additional 10% when you buy, saving 90% on title insurance when you sell.
Anita
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TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
That is awesome advice and is going into my mandatory actions column.
Those who say it cannot be done should not interrupt those who are doing it.
Great Info Girl!!!
Really good advice for rehabbers..
another reposting for those that may need this info
Anita
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TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
Very helpful information. Your the best!
Thank you
The Best Is Yet To Come!
Hi Anita,
I read on one of your other posting were you gave information regarding editable contracts. I am currently looking for user friendly contracts such as this. Would you have that information to give me? For some reason it was blocked on my computer on your other posting. Thank you.
The Best Is Yet To Come!
oh man, i'm lost again, ok ant, so i should ask for a "HOLD OPEN", policy?
SULLY.
YOUR HERO, SULLY
you should if you know you are going to try and flip the property within th year. It saves a lot of money in the end
Anita
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TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
for reference
Anita
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TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
There is always great information to be shared her. I will need to do my own research so I can offer great things to the community. Keep up the great work
thats a great idea. do your research and learn as much as you can. the dg.com family is here to help in any way we can
Anita
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TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
Can I ask a stupid questions...but can this be used when you do an assignment or double closing?
Thanks
Anne
they say knowledge is power,well you are making us all powerful Anita.ty and keep them coming.you do know this one is bookmarked right,lol
jim
Yes Anne you can use it then as well. I think it would be even more benficial using it then (an assignment)
Anita
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TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
Yes Anne you can use it then as well. I think it would be even more benficial using it then (an assignment)
Anita
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TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
Because i thought it mainly pertained to someone who would be "holding" the property for a while, like a "REHABBER" who would be rehabbing the property for 6 months, what would be the benefits of someone just Wholesaling the property?, Ant?, SULLY
YOUR HERO, SULLY
Title laws vary not only state to state but county to county.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
I just printed it off and put in my binder.If you guys dont quit comming up with so many good Ideas I am going to have to get another binder.LOL
Bill
Thank you for the info. As always you are a big help along with the rest of the DG family.
Dedicated & Motivated
Could this be used on a lease option? say two years
Thanks Max09
Thank you Anita!!! Awesome Idea!!!
I`ll be requesting this of my title co.
They sure are not offering these discounts.
Keep Bringing It!!! Thank you so much!!!
To Your Continued Success,
Hi ClaytonS!!!
I just added to my "Mandatory Actions" under "Title Insurance"
Including a reference that its BookMarked, great way to keep
things organized.
To Your Continued Success,
If your working with a Realtor & they have their own Title Company, can we use the options you gave us to their title company, and how would you address it.
What "Sully" mentioned can it be used for "Assigning" purposes also?
I'm un-clear of when you said that an additional 10% would be adding when we re-sell the property to the buyer, so we're paying an additional 10%, how are we saving in this manner, can you explain in detail so I can understand. Thanks!
Everyone Can Make A Difference!
John A.
110% Hold Opens
Definition
A “Hold Open” is a title insurance term
used to identify a sale with a commitment
to insure a resale within one year of the
effective date of the original commitment.
Realtors sometimes refer to these transactions
as “flips.”
There are always three parties involved in
a completed Hold Open transaction: the
original seller, the middle buyer (the person
requesting the Hold Open), and the final
purchaser.
Hold Opens are often associated with “fixer
upper” properties, but this is not a requirement
for a buyer to request a Hold Open.
Investment properties can be “held open”
from one sale to the next, and Hold Opens
are available for short-term owners who
simply know they will be selling the property
within a year.
Benefits of a Hold Open
A Hold Open ultimately saves money for
the middle buyer. If the buyer knows that
the purchased property will be resold within
a year, Land Title can hold open the file for
the resale at a fraction of the cost the buyer
would have paid—even with a discounted
reissue rate—in title insurance premiums.
The process works like this: The original
seller pays the applicable title insurance
premium for the initial sale to insure the
middle buyer. The middle buyer then pays
only 10% of the full basic premium charge
in order for the title company to keep the
file open, and no title insurance policy is
issued at this time. When the middle buyer
sells the property within a year, he pays the
difference in premiums between his purchase
price and the selling price on the second
half of the Hold Open, and a title policy
is issued only to the final purchaser.
For example, a property purchased for
$80,000 would have a full premium of
$744, so the buyer would pay $74 to hold
open the file. If he sells the house for
$100,000 (the full premium would be $797),
he would pay the difference of premiums,
which would be $53. His total title charge
would be $132, saving $293 over the total
$425 he would have paid if he had simply
used a standard 50% reissue rate.
Conditions for a Hold Open
A property is eligible for Hold Open status
only if the following conditions exist:
1. A commitment to insure the final purchaser
is issued upon recording the initial
conveyance to the middle buyer. This is
in lieu of a policy of title insurance to the
middle buyer.
2. There must be a single resale transaction
of the exact property as reflected on both
the original commitment to the middle
buyer and the final policy to the final
purchaser. For example, the purchase of
a duplex must be sold as a duplex, not
broken out into two separate units.
3. The middle buyer must sign an affidavit
acknowledging that he or she is aware the
property must be sold within one year, or
the Hold Open charge will be forfeited.
4. Both transactions must be insured
through the same title company. The final
purchase for a transaction initially held
open at one title company cannot be
insured by another title company.
Property value increases
Hold opens are sometimes referred to as
110% sales. The charge is based upon full
value of the estate or interest at the time
of the initial conveyance, with an additional
charge of 10% of the basic premium based
on the full value of the estate or interest.
Upon consummation of the resale within
one year, the owner’s title policy will be
issued without additional cost. If there is
an increase in liability between the initial
conveyance and the ultimate sale, a charge
will be made based on the difference
between the two liabilities calculated at the
applicable schedule of rates.
Additional stipulations
The Hold Open is available only one time
per transaction.
If the resale to the final purchaser is not
recorded within 12 months from the date
of the original commitment, the policy of
title insurance will be issued insuring the
purchaser in the initial sale in the amount
originally committed, and the Hold Open
charge will be forfeited.
Info from Land Title in Denver
can you fill me in on this? If you have to sell the house within the 12 month period you have to pay 35% tax or can you sell after the 12 month period at 15% tax and still be eligible for the "hold open discount"?
Thank you all for your post and all of the outstanding advise. This post is about a year old but the information is still good to know. I have "boom marked" it for future reference. In all of the conversation I had with the title company rep I spoke with she never revealed any of this. Thanks again.
lbrown
Thank you Anita for such informative info, being new this was an eye opener for me. Thanks Holly for breaking it down so well.
Anitarny & HollyJJ,
Thank you both for the great information. Every time I log in, I find another nugget of gold!
Wendy
The term "hold open" policy is a new one to me....I have always known that type of transaction referred to as a title policy binder.
Good article. Could a title policy be issued on a tax conveyance deed prior to the confirmation process.
Jimmy