survey and title insurance

6 Replies

Hey Everyone, I'm new here and new in this business. I recently purchased a detached house (40*100 irregular) and I'm going to fix and flip in few month. Do I need to get a survey and title insurance? Thanks so much for the help. 

I can't imagine not getting title insurance,  though you certainly don't need to.  As for survey, how confident are you with the boundaries and any easements there may be? 

Well I think the horse is out of the barn for title insurance. I could be wrong, but it's my understanding that you can only buy title insurance as part of closing. I'm assuming you paid cash, because a lender would have required title insurance to protect them, but not you. By the way, there are two types of title insurance: one protects the lender and the other protects the buyer. The lender insurance is required. The buyer insurance is optional.

Do you HAVE to have title insurance? The short answer is no, but it could end up biting you in the rear down the road. Title insurance protects you from any claims against the title that are unknown at the time of closing. If anything comes up, the title company is obligated to defend your claim to the title, or pay you damages if they are unsuccessful. Without title insurance, you're pretty much on your own.

Regarding surveys, I can't speak for NY, but our TREC contract requires the seller to provide a survey to the buyer and title company. If the seller does not comply, then the buyer is supposed to get their own survey which will be paid for by the seller.

Cash sales can get a little loosey-goosey with SOP because there's no lender to hold anyone's feet to the fire. But chances are your future buyers will finance their purchase, and their lender will require the full treatment.

So if I were you, I would go ahead and get a survey now. Depending on your state laws, you will probably be required to provide one to your buyer. As far as title insurance, there's really nothing you can do about that now. Just keep your fingers crossed that there are no claims on the title that weren't discovered when the last title search was conducted.

@Fred Heller

TREC contract do not require the seller to pay for the survey unless the box is checked for the seller to do so.  The survey as well as title insurance is a negotiable item determined by agreement between the parties

Since an existing survey is often acceptable to the title company,  I would ask the previous owner if they have one.  If it was a foreclosure,  I try to contact the previous owner who was foreclosed on and offer them $100 for their trouble to provide with a copy of their survey

Generally, a survey is not required for legal descriptions using a plat and lot and block title for the description, these are in neighborhoods, such as Lot Seven Block Eight of Riverside Subdivision, Orange County, ..... if you have a meets and bonds description (100'  East, 40" South, 120' Westerly.... you may need a survey.

Title insurance does not cover "area or content other than that shown by a proper survey" and lenders will want that coverage if it is not platted by lot and block.

Another issue, encroachments might be suspected, but can only be shown by a proper survey and title insurance will not cover such matters not shown and rarely if shown, depends on the encroachment. 

Fixing and flipping, you better get title coverage and show all your lien waivers and warrant title with construction being conducted in the past statutory period that liens may be filed. If you can show that you paid someone who files a lien your TI may cover you, otherwise it may be on you to defend. If you have construction financing, consider having the title company pay for the work, they will cover these matters. 

State laws certainly vary. Ask your title company or attorney. :)

@Greg H. Yes you're right about that. But I've never clicked the "buyer will pay" box when submitting an offer for a buyer. And I've never had a seller come back and try to negotiate it out. The cost of a survey is pretty insignificant relative to everything else that's going on.

@Michelle C.

You certainly Can buy title insurance now.  At the very least, get a title search and title commitment Now so you can find any potential problems before you spend any more money.  Always, Always get title insurance (or at least a title commitment for a short term hold).

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