Real Estate Investor · Lubbock, TX · Member since 2008 · 182 posts · 10 votes
I was told yesterday by my trusty title company that they will no longer close on properties that do not have title insurance. I bought a property two weeks ago and bought a policy. This week I sold the property and will have to buy yet another one. Can title companies dictate this way? I always buy a policy when I'm buying a property, but when I'm selling and holding the note, many of my buyers don't know about title insurance and don't care for it after I explain it. Does anyone know what our legal rights are concerning this in Texas? My closer's explanation was that the title company's underwriters are insisting upon this. If she's telling me the truth it will have statewide if not nationwide ramifications.
Is everyone still doing title insurance on the sale side (wrap note) subject-to purchases? I am curious to hear what others have to say about the Texas law.
I've never heard of this, but I would guess that its more about their bottom line than anything. I wouldn't guess there is much legally you could do, but I would definitely start looking for another title company.
Yet another reason to NOT use a title company. I'm a bit suprised that the would ever have done a closing without it, that's the big money maker. And of course the "no proration" part really sucks.
When I buy the seller pays. I sell just like you do, I carry the first mortgage. But I do ALL OF MY OWN DOCUMENTS; WD, DofT, Note and HUD-1. I usually charge the buyer about $350 for "document preparation, have the nice lady at the bank notarize everything and go on my merry way.
I closed this morning on one that I bought and I noticed that the title policy only cost the seller $503 on $50K, whereas about 5 years ago the same policy was costing about $580-$600, which IIRC was the state minimum charge up to $100K.
Thanks for the info. guys. Hey All Cash, I'll bet you can whip out those documents in less than 3 weeks can't you? :lol: I can think of other things to spend $500.00 on besides double insurance.
Well you see, that's a common misconception among the "uninitiated".
Time to open each file in Microsoft Word, 3 files, 3 seconds.
Time to open HUD-1 file in Microsoft Excel, 1 file, 1 second.
Time to insert buyer's and property's specific information, 30 seconds to 1 minute.
Time to update numbers in the HUD-1, 1 minute.
Time to convince SUCKER (sorry-customer) that what we're doing is time consuming, and needs to be done very carefully to ensure that there are ABSOLUTELY NO ERRORS (and if there are errors the CUSTOMER MUST PAY TO INSURE THEM), 2 weeks, 4 days, 7 hours.
Time to prepare bill for customer, 1 minute.
Total bill $500-$800 average in TX.
Amount of that bill spent wining and dining state legislators to make certain they don't pass any COMMUNIST INSPIRED (ie; in effect in any "non-backward-California) rules to give any meaningfull consumer protection (pro-rationing for quick resales) legislation, about $20.00 per closing.
You're right all cash but my title company still uses scribes to prepare the docs. that takes a long time! I think I'll look into my own doc. preparation. I bet you file things yourself as you merrily leave the closing :D . When those closers see how much mula we're really making in interest over time plus our markup they might think we won't mind the extra dollars but I do.
R2; we're not talking about BUYING, we're talking about SELLING.
I've bought property without title insurance, just had my attorney do a "nothing further" report, cost about $100.
In Iowa (at least I think it's Iowa-might be Nebraska) no one has title insurance, it's illegal. In fact if you read a title insurance policy, including the fine print, they all should be!
I usually don't get title insurance when I buy. Now I do have the title searched, but if I pay when I buy and then pay when I sell a short time later then I'm just wasting money.
Carlton Sheets says "Never buy a property without getting title insurance". If it's good enough for him then it's good enough for me. But check this out....
Why Title Insurance is necessary
Many buyers ask why title insurance is necessary. Title insurance protects a property owner (i.e., buyer) from hidden defects in title that are not uncovered (and in many cases could not be uncovered) during the course of a normal title examination. Examples of such hidden defects include forged signatures on deeds, missing heirs, wills that have not been properly probated, and errors in the clerk's office in recording deeds or releasing liens. Although claims involving title defects do not occur on a daily basis, the potential loss, in the event a claim does arise, can be catastrophic to a property owner who does not have title insurance.
In Texas title insurance is required on all realestate tranactions, purchases, cash outs and refinances. On purchase tranactions the seller pays the title policy
JB, title insurance is NOT required on all real estate transactions in Texas. I did one on Monday without it. Now MOST banks and all mortgage companies will require title insurance to be provided in order to LOAN on a property.
Also, in Texas title insurance is customarily paid for by the seller, but is completely negotiable. Even on the standard TREC contract that realtors in Texas are required to use, it has a check box for whether the buyer or the seller will pay for the title insurance.
R2d2, now let me be clear, I do get insurance if I am planning on keeping the property. If I just get the title checked on a flip, then I am taking some risk that a title cloud could come up in the short time that I own the property. To me its worth the risk versus paying for the policy twice.
Also, the title is at least insured back from when title insurance was last given on the property anyway.
Is everyone still doing title insurance on the sale side (wrap note) subject-to purchases? I am curious to hear what others have to say about the Texas law.
I currently have a commercial deal in Texas going, the seller is paying for the title insurance and it was proposed in the contract offer from the seller'ws attorney, actually the receiver under court order, doubt tha makes any difference. If you have had coverage to that sale I don't see getting another policy, but then you're not going to be the insured! Your old policy will n0ot cover you as a note holde in the future either, so the lender's policy should go with the buyer's policy (usually free to the lender) I can also see where a title company won't close any nytranasction without issuing title insurance since it inusres the settlement transaction as well. If this policy is not too old, ask for a premium/search discount due to the fact that they are already on the hook and they just did a search, so they don't need to go back any further than their last issue date. Thayt should save you some money! Good luck, Bill
Have you ever heard of a Title Insurance Binder policy. Basically for 10% extra when you are buying the property they will cover the sales transaction and only charge you the price difference.
Example: You buy a property for $100,000, you sell it for $150,000. You would pay 10% of your original policy plus the cost of insuring $50,000.
This is standard in CA unless you are an all cash buyer. Title insurance is worth the price you pay. I've seen many benefit from it when they thought they did not need it. This may be a good thing.
This is standard in CA unless you are an all cash buyer. Title insurance is worth the price you pay. I've seen many benefit from it when they thought they did not need it. This may be a good thing.
I don't think anyone questions it on the buy side of a transaction. If I am selling a property on a wrap note I know that I don't have any liens or encumberances so why he hell should I pay for title insurance on that side?
I used to not give title insurance on my wraps when I was selling them and then I had an attorney that I highly respect hand me the law that very clearly said I either have to disclose to the buyer many exact particulars about my financing or title insurance has to be provided. Provided not meaning that I have to buy it, but provided that the buyer gets a policy one way or another.
I don't recall and I can't seem to find the handout he gave me about the particular consequences if you don't do either, but they were severe enough that I decided it was definitely not worth the risk.
Needless to say, I always give title insurance on the sell side of my wraps now.