DVC Resale & Title Company Indemnification

[Sanchez]

For there to be a lien, there's have to either be a filed judgement or a filed mortgage. Simply pledging the ownership would not put the title at risk. My position remains that if reasonable due diligence doesn't suggest any problems, it is absolutely wasted money. At best, look at it like the extended warranty on electronics. Obviously one should look at the specifics including the cost of the insurance and the amount in question.

It's not an either or situation. I've never heard of getting a quit claim deed with a regular closing. Title insurance is a separate issue.[/QUOTE
Dean, drusba is absolutely correct. Your analysis is flawed for several reasons:

1. An on line search is hardly infallible. I am a real estate attorney in SC and sometimes perform work in Beaufort County. Liens are not always detectable on the County site.
2. In conjunction with number 1, last minute liens are usually not available for some time on the County site. Further, a proper title search will not likely detect recently filed liens. Title insurance will protect the owner in these circumstances.
3. County RMCs have been known to improperly record deeds and other documents. A lienholder may have properly sent a document for recording and it is improperly logged. The lienholder would have an claim in that circumstance.
4. As drusba stated, title insurance is generally for those things that are not able to be discovered by a proper title search. Nevertheless, it covers you when you are sued even if the claim has no merit. Time after time I represent property owners named in lien cases in meritless cases. They still have to pay my fee.

With all of that said, it is valid to consider the title insurance cost-benefit analysis. Title claims are rare but when they arise it is nice to have the backing of insurance counsel. The alternative is to pay someone like me $ 2,000 - $ 5,000 to defend your interests.

 

[Dean]

Dean, drusba is absolutely correct. Your analysis is flawed for several reasons:

1. An on line search is hardly infallible. I am a real estate attorney in SC and sometimes perform work in Beaufort County. Liens are not always detectable on the County site.
2. In conjunction with number 1, last minute liens are usually not available for some time on the County site. Further, a proper title search will not likely detect recently filed liens. Title insurance will protect the owner in these circumstances.
3. County RMCs have been known to improperly record deeds and other documents. A lienholder may have properly sent a document for recording and it is improperly logged. The lienholder would have an claim in that circumstance.
4. As drusba stated, title insurance is generally for those things that are not able to be discovered by a proper title search. Nevertheless, it covers you when you are sued even if the claim has no merit. Time after time I represent property owners named in lien cases in meritless cases. They still have to pay my fee.

With all of that said, it is valid to consider the title insurance cost-benefit analysis. Title claims are rare but when they arise it is nice to have the backing of insurance counsel. The alternative is to pay someone like me $ 2,000 - $ 5,000 to defend your interests.

I respect your opinion but given the limited directions of risk for a timeshare, especially DVC, I think it's a waste if there are no red flags. Are you personally aware of a title claim involving DVC or a timeshare in general?

 

[CarolMN]

I'm reading that:

* the risk of financial loss exists and that title insurance transfers the risk to the insurance company. (drusba and Sanchez)

* the risk of financial loss is very small and thus not worth paying an insurance company to take on the risk. (Dean).

I'm with drusba and Sanchez in most cases. IMO, the cost of title insurance is small enough relative to what a DVC contract costs, that it is worth it just for peace of mind.

An example of when I would not spring for title insurance is when an original purchaser transfers the title to a trust.

This really comes down to the level of risk one is willing or not willing to assume based on the cost of transferring the risk to someone else.

 

[Sanchez]

I respect your opinion but given the limited directions of risk for a timeshare, especially DVC, I think it's a waste if there are no red flags. Are you personally aware of a title claim involving DVC or a timeshare in general?

I agree with you that the risk is very low and that is why I think it is a cost benefit analysis. For $100 an owner's policy can eliminate many risks (the most likely being exposure to attorney fees.)

Our disagreement arises in the technical reasons for purchasing or not purchasing title insurance. Yes, sometimes there are red flags. As any real estate attorney will tell you, it is the things we do not know about that cause us to lose sleep.

Most attorneys ( at least in SC) are going to advise clients to makr the purchase. This is for three reasons:
1. Lawyers are trained to minimize as many risks as possible. Advising a client to purchase the policy is the most prudent thing to do;
2. If a claim arises and the client does not have coverage the client's only recourse may be to sue the closing lawyer;
3. Most lawyers are licensed title insurance agents and receive a financial benefit from title insurance.

I have not accepted timeshare closings for several years. The transactions are too small and do not generate enough income. I am not aware of any claims though I will ask a few questions at our upcoming title insurance seminar.

 

[Sanchez]

I'm reading that:

* the risk of financial loss exists and that title insurance transfers the risk to the insurance company. (drusba and Sanchez)

* the risk of financial loss is very small and thus not worth paying an insurance company to take on the risk. (Dean).

I'm with drusba and Sanchez in most cases. IMO, the cost of title insurance is small enough relative to what a DVC contract costs, that it is worth it just for peace of mind.

An example of when I would not spring for title insurance is when an original purchaser transfers the title to a trust.

This really comes down to the level of risk one is willing or not willing to assume based on the cost of transferring the risk to someone else.

I think that you have summarized it well.

 

[Dean]

I agree with you that the risk is very low and that is why I think it is a cost benefit analysis. For $100 an owner's policy can eliminate many risks (the most likely being exposure to attorney fees.)

Our disagreement arises in the technical reasons for purchasing or not purchasing title insurance. Yes, sometimes there are red flags. As any real estate attorney will tell you, it is the things we do not know about that cause us to lose sleep.

Most attorneys ( at least in SC) are going to advise clients to makr the purchase. This is for three reasons:
1. Lawyers are trained to minimize as many risks as possible. Advising a client to purchase the policy is the most prudent thing to do;
2. If a claim arises and the client does not have coverage the client's only recourse may be to sue the closing lawyer;
3. Most lawyers are licensed title insurance agents and receive a financial benefit from title insurance.

I have not accepted timeshare closings for several years. The transactions are too small and do not generate enough income. I am not aware of any claims though I will ask a few questions at our upcoming title insurance seminar.

Dave McLintock is a CPA who is also very experienced with Timeshares. If I recall his view correctly, and that of most on TUG, it's the same as yours. Not to buy it for most situations but to look at the dollars and the cost and make a final decision and in general I agree with that. The issue for DVC, IMO, is that the risks are dramatically low, are concentrated and extremely easy to evalutate at least for OC and likely for HHI as well. HI is another matter, don't know about CA and haven't lookat at VB.