Title Insurance

10 Replies

I bought a house cash to flip on April 17.

On the HUD I have this for title

1101 Titles Services and Lenders Title Insurance $750
1103 Owners Title Insurance $965

Ok.. now.. I am going to refinance this house with a hard money lender next week hopefully. I am also going to change the LLC that owns the property to another LLC that I own.

1. Do I need to get all new title insurance?

2. If I do get new title insurance with a different title company (or even the same title company), is the title insurance on the first purchase going to be pro-rated and refunded?

732-903-2522

My understanding is as follows:

  1. you didn't need to get both title insurance policies the first time, if the bank got title insurance that will effectively protect you.
  2. when the house gets deeded to a new entity, all previous title insurance gets wiped out.
  3. if you weren't planning on deeding it, the title insurance you got for yourself the first time should remain in place.
  4. owning a property without current title insurance is never ever advisable. I hate buying title insurance. I've asked lawyers, title companies and on this forum whether I can get away without title insurance. The answer has always been no.
  5. if you go back to the same title company, they will prorate the cost of the NEW title insurance. they won't refund the previous insurance but there should be some savings on the new policy. haven't tried this, interested in what you get.
Originally posted by @Marty Happle :
I bought a house cash to flip on April 17.

On the HUD I have this for title

1101 Titles Services and Lenders Title Insurance $750
1103 Owners Title Insurance $965

Ok.. now.. I am going to refinance this house with a hard money lender next week hopefully. I am also going to change the LLC that owns the property to another LLC that I own.

1. Do I need to get all new title insurance?

2. If I do get new title insurance with a different title company (or even the same title company), is the title insurance on the first purchase going to be pro-rated and refunded?

1. Yes, the title insurance only protects the owner listed on the policy. In this case LLC A. If you deed the property to LLC B then the insurance is no longer valid because LLC A (the one insured) doesn't own it.

2. Maybe. Depends on the company. I'd call them to see if you can work something out.

@Katharine Chartrand & @David O ... thanks a lot.

732-903-2522

@Ned Carey  thanks.. I just asked my attorney's paralegal to look into it.  ;o)

732-903-2522

I'm sorry guys, can someone clear some things up for me...

Do I have to buy title insurance separately when I purchase a property?

My understanding is that it protects from outstanding liens, is that correct?

Legally, does it guarantee that a lien holder can't come after me?

Thanks

@Reggie Maggard ,

The required Title insurance is designed for the lender to protect them. It does not guarantee protection against liens. It is insurance to pay out for any costs associated with trying to protect/fight/payoff claims against a lien that was not discovered.

This is why, in order to issue title insurance, a title search must be ran. If liens (or encumbrances) are found, then the title insurance covers anything unforeseen NOT INCLUDING the discovered. This is why the liens must be settled before closing. The lender won't lend for a property with a lien which was discovered and not protected by title insurance.

There are other optional title insurances that provide some protection for other parties; But the above is primarily what people are referring to and is primarily what is required for many areas.

Hope that clarifies for everyone. If I have any information wrong please step in. This is my understanding based from a friend who does title work.

In PA, if you are buying the property for cash, you can ask the title company to "keep the title insurance open" for upto 1 yr, which will prevent you from needing another policy if you refinance within that time.

Haven't tested this theory out yet.

Originally posted by @Justin VanDervort :

Reggie Maggard ,

The required Title insurance is designed for the lender to protect them. It does not guarantee protection against liens. It is insurance to pay out for any costs associated with trying to protect/fight/payoff claims against a lien that was not discovered.

This is why, in order to issue title insurance, a title search must be ran. If liens (or encumbrances) are found, then the title insurance covers anything unforeseen NOT INCLUDING the discovered. This is why the liens must be settled before closing. The lender won't lend for a property with a lien which was discovered and not protected by title insurance.

There are other optional title insurances that provide some protection for other parties; But the above is primarily what people are referring to and is primarily what is required for many areas.

Hope that clarifies for everyone. If I have any information wrong please step in. This is my understanding based from a friend who does title work.

 Question:  how does Title insurance protect me if I pay cash?

Title insurance protects you from Unknown issues, not apparent now, that may arise later.  Paying cash or financing doesn't change this.

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