Hi, we purchased a small lot of raw land last year and have since improved it and added a mobile home. When we bought it we closed through a title company and had title insurance. Now we are selling it owner finance. Do we need to go through a title company for title insurance again, or can we just have a real estate attorney prepare the documents? The buyer is not concerned about title insurance and I thought it was only for the buyers protection but wanted to get some clarification on this. It's $1k cheaper to just go through the attorney.
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
If the OP checks his Owner's Title Policy he may find the Conditions section of the policy provides:
CONTINUATION OF COVERAGE
a. Your coverage under this policy continues as of the Date of Policy, so long as You:
i. own Your Title;
ii. own an obligation secured by a purchase money Mortgage given by a purchaser from You; or
iii. have liability for warranties of title given by You in any transfer or conveyance of Your Title.
Therefore, it's my opinion that coverage under a lender's policy would be redundant at best.
This is interesting - I was not aware of this.
I understand, many people aren't. I just happen to have a background in title insurance and have dealt with the issue many times.
Hi, we purchased a small lot of raw land last year and have since improved it and added a mobile home. When we bought it we closed through a title company and had title insurance. Now we are selling it owner finance. Do we need to go through a title company for title insurance again, or can we just have a real estate attorney prepare the documents? The buyer is not concerned about title insurance and I thought it was only for the buyers protection but wanted to get some clarification on this. It's $1k cheaper to just go through the attorney.
It is true that in traditional real estate transactions (where the buyer is paying cash or is financing through a third-party) that title insurance offers little benefit to the seller. Title insurance is generally designed to protect the interests of those who may have rights or interests in the property after the sale is completed. This includes both the buyer or new owner of the property and the lender on the deal (this is why traditional lenders will require title insurance). Because you are the lender on this deal and thus will retain an interest in the property, likely in the form of a security interest, you may still want to seriously consider requiring title insurance with you named as one of the insured parties. Doing so can help ensure that your security interest in the property is protected.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.
It is true that in traditional real estate transactions (where the buyer is paying cash or is financing through a third-party) that title insurance offers little benefit to the seller. Title insurance is generally designed to protect the interests of those who may have rights or interests in the property after the sale is completed. This includes both the buyer or new owner of the property and the lender on the deal (this is why traditional lenders will require title insurance). Because you are the lender on this deal and thus will retain an interest in the property, likely in the form of a security interest, you may still want to seriously consider requiring title insurance with you named as one of the insured parties. Doing so can help ensure that your security interest in the property is protected.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.
Please see my response to Patrick.
This is helpful, thank you all. I had just assumed that since we originally had title insurance when we purchased the lot, we could be assured that all is free and clear. We haven't borrowed money against it or anything like that. But maybe it is better to get it just to be on the safe side.
This is helpful, thank you all. I had just assumed that since we originally had title insurance when we purchased the lot, we could be assured that all is free and clear. We haven't borrowed money against it or anything like that. But maybe it is better to get it just to be on the safe side.
The owner's policy would have protected you against any claims that arose while you owned the property that caused a loss for a covered reason - similar to homeowner's insurance. If the issue that causes a loss doesnt arise until after you make the loan, then I doubt the original owner's policy would continue to cover you (but that is a question for a title expert).
This is helpful, thank you all. I had just assumed that since we originally had title insurance when we purchased the lot, we could be assured that all is free and clear. We haven't borrowed money against it or anything like that. But maybe it is better to get it just to be on the safe side.
In my opinion, the coverage under your owner's policy should continue after you sell the property and take a purchase money mortgage from your buyer. I suggest you check the Conditions section of your policy, probably para 2, to confirm the provision I cited is there.
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
If the OP checks his Owner's Title Policy he may find the Conditions section of the policy provides:
CONTINUATION OF COVERAGE
a. Your coverage under this policy continues as of the Date of Policy, so long as You:
i. own Your Title;
ii. own an obligation secured by a purchase money Mortgage given by a purchaser from You; or
iii. have liability for warranties of title given by You in any transfer or conveyance of Your Title.
Therefore, it's my opinion that coverage under a lender's policy would be redundant at best.
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
Who will handle the settlement and what the seller (you) is required to provide the buyer to confirm your ownership of the land and any allowed encumbrances is generally specified in the contract for sale and purchase. Based on your questions I suspect you haven't done this before and suggest you retain either a real estate attorney or an experienced real estate agent who will assist you on a flat rate. A good attorney will tell you $500 paid before signing the contract is cheaper than paying $5k or more to fix a problem created by not knowing what to do.
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
If the OP checks his Owner's Title Policy he may find the Conditions section of the policy provides:
CONTINUATION OF COVERAGE
a. Your coverage under this policy continues as of the Date of Policy, so long as You:
i. own Your Title;
ii. own an obligation secured by a purchase money Mortgage given by a purchaser from You; or
iii. have liability for warranties of title given by You in any transfer or conveyance of Your Title.
Therefore, it's my opinion that coverage under a lender's policy would be redundant at best.
This is interesting - I was not aware of this.
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
If the OP checks his Owner's Title Policy he may find the Conditions section of the policy provides:
CONTINUATION OF COVERAGE
a. Your coverage under this policy continues as of the Date of Policy, so long as You:
i. own Your Title;
ii. own an obligation secured by a purchase money Mortgage given by a purchaser from You; or
iii. have liability for warranties of title given by You in any transfer or conveyance of Your Title.
Therefore, it's my opinion that coverage under a lender's policy would be redundant at best.
This is interesting - I was not aware of this.
I understand, many people aren't. I just happen to have a background in title insurance and have dealt with the issue many times.
Probably Title. I'm not familiar with Texas specifics, but the states I lend in are attorney states. An RE law firm handles the closing and the title work/commitment and policy issuance.
In something like this, your attorney who represents your interests would prepare your loan docs, closing instructions and review title work and the commitment/exceptions. You typically dont want the agent of the title insurer doing that part.
Hi, we purchased a small lot of raw land last year and have since improved it and added a mobile home. When we bought it we closed through a title company and had title insurance. Now we are selling it owner finance. Do we need to go through a title company for title insurance again, or can we just have a real estate attorney prepare the documents? The buyer is not concerned about title insurance and I thought it was only for the buyers protection but wanted to get some clarification on this. It's $1k cheaper to just go through the attorney.
If you haven't already done so, I suggest you consider asking the title agent that issued your policy to endorse your current policy to increase the amount of insurance to the market value, otherwise you are self-insured for the difference.
The thing is, we only had title insurance for the land but that's a very small lot and it was not a lot of money. The mobile home we bought and moved on there we have transferred and obtained the statement of ownership so there shouldn't be any issues with that. Yes, definitely our first time and learning a lot.
The thing is, we only had title insurance for the land but that's a very small lot and it was not a lot of money. The mobile home we bought and moved on there we have transferred and obtained the statement of ownership so there shouldn't be any issues with that. Yes, definitely our first time and learning a lot.
That's why I suggested going back to the agent that issued your policy and asking for an endorsement increasing the amount of coverage to the current value of the property. You will probably need to provide some evidence of the value and pay the premium for the increase.
The thing is, we only had title insurance for the land but that's a very small lot and it was not a lot of money. The mobile home we bought and moved on there we have transferred and obtained the statement of ownership so there shouldn't be any issues with that. Yes, definitely our first time and learning a lot.
That's why I suggested going back to the agent that issued your policy and asking for an endorsement increasing the amount of coverage to the current value of the property. You will probably need to provide some evidence of the value and pay the premium for the increase.
Thanks so much, we are going to ask about that
The thing is, we only had title insurance for the land but that's a very small lot and it was not a lot of money. The mobile home we bought and moved on there we have transferred and obtained the statement of ownership so there shouldn't be any issues with that. Yes, definitely our first time and learning a lot.
You may also have to demonstrate the mobile home has been permanently affixed to the land and the mobile home title has been retired but check with the agent for the underwriter's requirements.
The thing is, we only had title insurance for the land but that's a very small lot and it was not a lot of money. The mobile home we bought and moved on there we have transferred and obtained the statement of ownership so there shouldn't be any issues with that. Yes, definitely our first time and learning a lot.
That's why I suggested going back to the agent that issued your policy and asking for an endorsement increasing the amount of coverage to the current value of the property. You will probably need to provide some evidence of the value and pay the premium for the increase.
Thanks so much, we are going to ask about that
You're welcome.