Title insurance

[cubigbird]

I know this has been covered before but curious now what folks think. Buying a VSE mandatory Kierland week 81,000 staroptions but the sale price is only $1,300. Is there any benefit to having title insurance on that? I can understand that it would be wise if the price was a lot higher. At what price point is it generally not a good idea?

 

[vacationtime1]

I know this has been covered before but curious now what folks think. Buying a VSE mandatory Kierland week 81,000 staroptions but the sale price is only $1,300. Is there any benefit to having title insurance on that? I can understand that it would be wise if the price was a lot higher. At what price point is it generally not a good idea?

It's a numbers game, and at $1,300, you don't want to play.

Suppose title insurance costs $200 and you think there is a 1% chance of a title issue. Then you shouldn't buy title insurance unless the property is worth over $20,000. Remember title insurance doesn't cover everything; it won't cover unpaid MF's, the start date on year of usage, etc. It only covers defects in title -- such as judgment liens, unpaid property taxes, the seller's ex-spouse didn't sign the deed, or an inaccurate legal description which no one will ever notice.

 

[cubigbird]

I'm using LT Transfers for closing so I'm sure they will do a complete search of the chain of title.

 

[DeniseM]

Since you are using LTT, you are in good hands - they will automatically get an estoppel letter (Vistana resale information sheet.)

 

[tschwa2]

I'm using LT Transfers for closing so I'm sure they will do a complete search of the chain of title.

I don't think they do a complete search of the chain of title. They prepare and record deeds. That's why they are cheap. They are pretty bare bones. They can get an estoppel and verify the last owner (the seller) was the owner of record with the resort but I think that is about it. By not doing a title search and getting title insurance you risk that someone along the line did an incorrect transfer and can claim ownership but with most cheapy timeshares how likely is that to be the case?

 

[CalGalTraveler]

I don't think they do a complete search of the chain of title. They prepare and record deeds. That's why they are cheap. They are pretty bare bones. They can get an estoppel and verify the last owner (the seller) was the owner of record with the resort but I think that is about it. By not doing a title search and getting title insurance you risk that someone along the line did an incorrect transfer and can claim ownership but with most cheapy timeshares how likely is that to be the case?

LOL...a mistake could actually work in your favor should you want to dump it later on...argue to the management company that you don't actually own it and are not responsible for maintenance fees anymore...

 

[vacationtime1]

I don't think they do a complete search of the chain of title. They prepare and record deeds. That's why they are cheap. They are pretty bare bones. They can get an estoppel and verify the last owner (the seller) was the owner of record with the resort but I think that is about it. By not doing a title search and getting title insurance you risk that someone along the line did an incorrect transfer and can claim ownership but with most cheapy timeshares how likely is that to be the case?

+1

LTT probably does a good enough job drafting deeds. But the title their deeds convey is no better than the title owned by the person signing the deed.

The good news is that no one is likely to challenge your title because it is almost never worth the legal fees to do so.

 

[dioxide45]

A bad chain of title can be costly to fix, IF someone wishes to even challenge your right to title. You can often do a quick title search yourself if the county the resort is located in has online records that you can lookup to see if there are any outstanding liens. Still no replacement for title insurance.

 

[CalGalTraveler]

A bad chain of title can be costly to fix, IF someone wishes to even challenge your right to title. You can often do a quick title search yourself if the county the resort is located in has online records that you can lookup to see if there are any outstanding liens. Still no replacement for title insurance.

True if it is a property that has value when you sell.

Hypothetically, if it is worthless, you are trying to dump it and and there is a mistake in the chain of title, wouldn't it be up to the management company to provide the burden of proof that you own it?

 

[dioxide45]

True if it is a property that has value when you sell.

Hypothetically, if it is worthless, you are trying to dump it and and there is a mistake in the chain of title, wouldn't it be up to the management company to provide the burden of proof that you own it?

I don't know. However, bad title isn't an easy way out. If you have made MF payments, you have previously shown that you believe you are the owner. Finding a problem in the chain of title isn't a way for you to get out of ownership. The management company would be in their right to continue billing you for future fees.

Also, in many cases title is just clouded with prior liens or judgement. In order to sell, those should usually be paid off. If they aren't, title insurance would pay them. If you don't have title insurance it may be up to you to pay it in order to get title out of your name. You are still the owner and still have to pay any future assessments. It is of course possible that the lien holder could foreclose on their lien and you could lose the week.

 

[CalGalTraveler]

Interesting discussion. A couple of questions:

1) Devils advocate: If the property is worthless, wouldn't it be simpler to just sign over the deed to the party that is claiming ownership or the mortgage lender rather than an expensive legal battle for something you don't want anymore? I don't think a mortgage lender can come after a subsequent buyer for mortgage payment since they never signed the mortgage. Especially if the estoppel and the seller did not disclose an outstanding mortgage. (I am not a lawyer...)

2) Some states require licensed real estate agents to run a title search. If you are working through a licensed broker and the title search and estoppel are clean, then perhaps the risk is minimized significantly and title insurance becomes a formality?

 

[dioxide45]

Interesting discussion. A couple of questions:

1) Devils advocate: If the property is worthless, wouldn't it be simpler to just sign over the deed to the party that is claiming ownership or the mortgage lender rather than an expensive legal battle for something you don't want anymore? I don't think a mortgage lender can come after a subsequent buyer for mortgage payment since they never signed the mortgage. Especially if the estoppel and the seller did not disclose an outstanding mortgage. (I am not a lawyer...)

You can't simply sign over your deed. There is no obligation of the entity or person you signed it over to to accept it. Also, just because you sign over a deed, it doesn't remove your liability you signed up for by signing the note. The mortgage only secures the deed, also most notes will have language that if you convey the deed to someone else, the note becomes payable in full. Signing over your ownership of the property does not absolve you of your obligation to the note.

2) Some states require licensed real estate agents to run a title search. If you are working through a licensed broker and the title search and estoppel are clean, then perhaps the risk is minimized significantly and title insurance becomes a formality?

I am not aware of any states that require a real estate agent to run a title search. If they are, it certainly won't be to the same depth that a title insurer would run. They would probably just be validating current ownership, not checking for possible breaks in insurance that could go back many years.