Do you need Title Insurance for Vacant Land?

Question

I am purchasing an off market piece of developed land. It is a lot in a 31 plot neighborhood that was developed in 2014. It had one owner from 2014 until now, and during that time there is one county record of the plot lines being adjusted. Other than that, it's been siting vacant. It is also 50' from designated wetland.

With that information, is this property a good candidate for title insurance, or could I get away with not opting in for title insurance?

Dan Roma · Answer

If it’s a warranty deed, most title companies will not close without title insurance. Check with a local company in your area but I believe the insurance covers their work in tranfering title. It’s mainly a CYA for the title companies.

Guy Gimenez · Answer

What is your financial exposure?  $5,000 or $50,000?  If a claim is made against the property (without title insurance) and the potential loss of ability to convey the property in the future will make you lose sleep, the get title insurance.

Jon Holdman · Answer

I would disagree that the risk is less for vacant land (which is not what you're dealing with) vs. improved land.   The risks title insurance protects against are someone making a claim on the property.  If I understand correctly, this is a lot in a subdivision.  Someone did this subdivision.  Did they have 100% ownership of the land that was subdivided?  Or, is there some distant cousin that's going to show up with a valid claim that they had some ownership and were not properly compensated?  If there are roads or utilities completed (horizontal development) were all those contractors paid?  If there was a survey as part of the subdivision, was the surveyor paid?  Those are the sort of risks title insurance protects against.  The value is higher if a property is developed, but the risks are the same.

Andrew S. · Answer

The premium depends on the value of the property, so if it is very cheap dirt then the premium will be low.  If it is $300k/ac expensive dirt, then the premium will be high.

Jon Holdman · Answer

Title insurance protects you against outstanding claims against the ownership of a property.  Could be someone who has some claim to the property anywhere in its ownership history, even before it was subdivided.  It also protects against a lien filed by someone who worked on the property.  Its just as necessary for partially improved land as for a fully developed property.  But like all insurance, its to protect against possible losses you could not afford to cover yourself.  If you determine the risk is low it may be ok to skip.

Tom Gimer · Answer

With only 1 transfer since the subdivision and several years passing since the developer sold the lots... low risk.

Julie Marquez · Answer

@Jon Holdman Thanks for pointing out the different things to think about on what insurance could cover

Brett Dawson · Answer

It is certainly a lower risk situation based it being newly dedicated parcel because it was improved, but title insurance can be cheap piece of mind. I would contact my title company have them provide me a line item cost for it.  Since it is a brand new parcel number, you could also go to the courthouse and do the due diligence yourself.

Tom Gimer · Answer

Of course if you want peace of mind you always purchase an owners policy. But that wasn’t the question.

The subdivision was 4+ years ago. If liens were going to be recorded that would have occurred before the lots were sold IMO.

Julie Marquez · Answer

@Jon Holdman It appears on the surface that the risk is lower on a vacant piece of land, but insurance exists for the things you can't see. Maybe the premium for this insurance would be less than normal.

Do you need Title Insurance for Vacant Land?

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