Do I need a title company for this?

Question

Looking to purchase land directly from a seller and they have assured me that they own the land outright and also advised me that I can confirm their ownership with the local county. However, is it normal practice to hire a title company or purchase title insurance as a part of closing on a land purchase? How is this done?

Thanks!

Guy Gimenez · Answer

No, you don't need title insurance as long as you can afford to lose the amount invested without losing sleep. Otherwise, the answer is yes. Accepting someone at their word regarding ownership is the easiest way to lose your money. One of the most common real estate scams in the last couple of years has involved unimproved land sales. I highly recommend you get some help from a local investor or agent to help guide you through the process since this all new to you. Yes, you'll have to pay them but until you become familiar with investing, it's often well worth the expense.

Stuart Udis · Answer

Title insurance offers more protections than merely the most recent transfer and whether the property is encumbered with a mortgage. How about easements or deed restrictions? Certainly a possibility with vacant land and could make the land undevelopable. How about liens besides a mortgage?  Tax Lien?  Other Municipal Lien? Mechanics lien?

Joe Funari · Answer

@Shawn Blake I would strongly suggest you have a title company arrange closing. Title is neutral in the transaction.They will ensure that seller not only does actually own the land. Bu equally important that the seller is current on their property taxes. Also, recommend you get an existing survey from the seller. If they don't have one have title order one. Also, get survey insurance from the title company too. They can explain in more detail coverages of this. But inexpensive and will mitigate your risk. Also, moving forward post the city and state your purchasing in so that you get fellow investors familiar with that area to give more targeted advise. I work in the Dallas/Ft. Worth area. But have been involved in plenty of land deals.

John Clark · Answer

Always make the seller provide title insurance. Part of the act of providing title insurance is that the seller has to give the title company an affidavit of his names and aliases, addresses, work down on the house within the past X months, and lawsuits/ judgments against him. That way the title company can determine if there are judgment liens or mechanics liens, in addition to title status, easements, etc.

Chris Ayars · Answer

Yes, Absolutely!

The title company researches to make sure there is a clear title and that the seller is the correct owner with the authority to provide you with a deed to the property. They will find out if there is supposed to be another signer as well.

Title insurance is there to cover any discrepancies that the title company was not able to uncover and assures you that you have a clear title. While this is not required, it is highly recommended.

Shawn Blake · Answer

You're all awesome, thank you

Do I need a title company for this?

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