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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"FAILURE IS NOT AN OPTION"
Wow what great information!! Sharing for the newbies like me!
Monica
Skeptic, turned hopeful, turned determined!
You will NEVER succeed if you don't try.
never to old to learn something new (and valuable)tonyn
Tony Neumann
Hi John, this threw me, too, until I realized Anita must have meant to write, "...Since the BUYER [my caps] usually pays for title insurance, you can pay the additional 10% when you buy, saving 90% on title insurance when you sell."
In other words, as I read it, what happens is this.
When you buy a property, in response to your request, the title company says, "Yes, since you plan to sell the property so soon we can 'hold open' your seller's title insurance policy until you sell; however, you'll have to let us write your buyer a new title policy and you'll have to pay us 10% of that new policy cost now."
This way you guarantee the title company YOUR buyer's business, too, and in return, rather than cancelling your seller's policy and writing you a new one they write the new policy as though you already are the seller and simply "hold open" your seller's current policy until you do sell. You pay the title company only the 10% surcharge for the "hold open" paperwork. The other 90% of cost, that of the new title policy, is deferred and passed on to your buyer when you sell.
And instead of writing 2 completely new policies the title company will have written only one, the one for your buyer when you sell.
This is great stuff.Thankyou for this info.I love the DG family!
This is THE Best info yet!My hubby and I didn't know about any of this. we haven't went to a title co. yet, so this will give us an advantage!!
Thanks Anita
Cbardy43
Education,Education,Education!!! Great information! and what so Amazing it's all FREE!!!!
Richard
Richard Armendariz
Thanks for the information.
Thank you very much I would like to network with you asap.
IM a Diamond in the rough looking for partners I would like to be apart of dean's elite team in the very near future my goal is 100 properties a year
P.S.
god bless all the members may we all shine bright like diamonds.
P.H.G.
Borrowers don’t often pay much attention to the title insurance required by their mortgage lender — until they see the sizable charge for it on their list of closing costs.
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Ostensibly, that premium (and sometimes assorted fees) reflects the cost of guaranteeing the borrower clear ownership of a property. Title agents search public records for tax liens and any other outstanding claims that need to be resolved, and then insure the borrower and the lender against claims that might have gone undetected.
Title insurance rates vary considerably by state. In New York, insurers belong to a rating bureau that submits a rate schedule for state approval. Depending on the value of the property, costs can easily run into the thousands. On a $500,000 home with a $400,000 mortgage, for example, the premium in the New York City area would be $2,666, according to Rafael Castellanos, the managing partner of Expert Title Insurance Agency in Manhattan. “It’s a bargain in the end given the protection title insurance provides,” he said.
Yet for years, a debate has raged as to whether premiums are too high, competition too constrained, and the insurers too closely intertwined with the mortgage and real estate professionals who send business their way. Some states have looked into the arrangements between title insurers and referral sources, including New York. In 2006, two title insurers that account for half the New York market — the Fidelity National Title Group and First American — agreed to 15 percent rate reductions to settle state allegations of illegal referral payments and rebates.
Another investigation may be afoot. Mr. Castellanos and two other industry executives said the state Department of Financial Services sent subpoenas to a number of title companies. A department spokesman would not comment on the claim.
Borrowers typically rely on their mortgage broker or real estate agent to select a title agent for them, but Mr. Castellanos says they are better off making the selection themselves. He advises borrowers to ask a real estate lawyer to recommend an independent title company, and to avoid title agencies that have a business affiliation with the real estate agency or lender recommending them.
One insurer is offering a more transparent option. Entitle Direct in Stamford, Conn., offers premium rates up to 35 percent below the going rates in the 40 states in which it operates. (These rates are not available in New Jersey.) According to the company’s founder, Timothy M. Dwyer, Entitle is able to offer reduced rates by marketing directly to consumers and eliminating the use of title agents, who typically receive a hefty split of the insurance premium for their services. “The national average commission is 80 percent of the premium,” he said. “We do not have that expense. We contract out to a third-party partner that provides us with the title search product.”
Founded in 2009, the company has grown slowly. Entitle’s sales account for only 0.1 percent of the total national premium, said Birny Birnbaum, the executive director of the Center for Economic Justice, a consumer advocacy group. He attributed the slow growth to “the limited price competition in title insurance markets and the strength of the institutional arrangements between title insurers and those able to steer title business — lenders, developers, Realtors, builders.” NYTimes