DVC Resale & Title Company Indemnification

[csmommy]

Hi all - perhaps I did not notice this the 1st time I purchased a resale, but with the OKW contract that just passed ROFR there is a statement on the Title Ins Co. agreement that I have a problem with.

Background - 70 OKW points - resale through Fidelity - 60 banked from 2011.

The document they want me to sign states:

The Buyers agree to accept this Certificate & Indemnification Agreement complete the purchase of said timeshare week/interest & to not hold First American Title Insurance Company liable as a result of any false statements contained herein as to the availability or use of the unit/interest.

So my questions is how do I know the 60 points were banked & that the 2012, 2013, etc points are available? And if they are NOT available, like I was told, who is liable?

 

[SSR]

So my questions is how do I know the 60 points were banked & that the 2012, 2013, etc points are available? And if they are NOT available, like I was told, who is liable?

[not legal advice]
Your recourse would be against the sellers for breach of contract.

Can you have the sellers give you a dated screenshot of the points from the DVC member website?

 

[Magnod]

I think Magic Title (Timeshare store) has a similar clause.

It says something about not guaranteeing that the claims of seller are true. They only confirmed that there were no discrepancies on the title.

So I guess there could be no banked points that the seller issued. But with everything positive about the Timeshare store, I'm hoping that they do some research or have repercussions for sellers that do not provide accurate information.

 

[drusba]

If you go through a title insurance company and purchase title insurance, that protects you only from unknown liens (such as by creditors of the seller) or claims that the seller did not legally own the property sold. Title insurance does not provide any protection against the seller's having used or banked points. Your claim resulting from a seller who lies about point availability is against the seller for monetary damages or rescission of the sale, or possibly against the broker for monetary damages if the broker did nothing to verify.

 

[csmommy]

Fildelity is going to order an updated point summary directly from Disney to confirm the points are banked.

I still do not like that disclaimer from the title company, but what can I do?

 

[etemplet]

A couple of things raised and eyebrow for me as well as I was signing a contract. I'm going to assume this is the way it is done and trust the integrity of the company. Of course, I'll ask some questions as well and read closely. Thanks for the heads up. My contract has no points at present but a full compliment of 2012...which could have been borrowed...LOL.

Good Luck !!

 

[Dean]

If you go through a title insurance company and purchase title insurance, that protects you only from unknown liens (such as by creditors of the seller) or claims that the seller did not legally own the property sold. Title insurance does not provide any protection against the seller's having used or banked points. Your claim resulting from a seller who lies about point availability is against the seller for monetary damages or rescission of the sale, or possibly against the broker for monetary damages if the broker did nothing to verify.

Exactly. Title insurance is for the title, not points accounting. IMO, title insurance is a wasted expense for DVC and most timeshares where one can look online for most of the risks.

 

[etemplet]

Exactly. Title insurance is for the title, not points accounting. IMO, title insurance is a wasted expense for DVC and most timeshares where one can look online for most of the risks.

Unless you need it. I'm pretty sure it was $25.00 on my contract. Unless I misread something. $500 VS $525. they check to insure there is not leins, taxes, or other liabilities on the property. I'm sure I missed a couple of things but....worth $25.00 to me for sure. I'd have paid allot more. CYA is the name of the game. LOL

 

[Dean]

Unless you need it. I'm pretty sure it was $25.00 on my contract. Unless I misread something. $500 VS $525. they check to insure there is not leins, taxes, or other liabilities on the property. I'm sure I missed a couple of things but....worth $25.00 to me for sure. I'd have paid allot more. CYA is the name of the game. LOL

It's usually somewhat more but not dramatic, I'm thinking the last one's I looked at were more in the $125 range but it will vary a little bit based on the dollar amount though usually with a minimum price. You can check all of these things yourself easily by taking some simple steps in counties where you can check online which includes Orange County FL and Beaufort Co, SC plus the info that goes through DVD directly. One can check online for liens plus DVD won't allow it to close with an open loan, main fees or taxes due unless their cleared at closing. One can check the title listings and names easily and make sure that all parties are signed on. The bottom line is it's a false sense of security rather than a real benefit in the case of DVC, IMO.

 

[Magnod]

Unless you need it. I'm pretty sure it was $25.00 on my contract. Unless I misread something. $500 VS $525. they check to insure there is not leins, taxes, or other liabilities on the property. I'm sure I missed a couple of things but....worth $25.00 to me for sure. I'd have paid allot more. CYA is the name of the game. LOL

Aren't those things already cleared by the resale company? I don't recall the exact document, but I thought I saw something mentioning that they did a screening of the title to ensure that it was clear with no liabilities on the property.

 

[drusba]

I would not call title insurance completely useless for DVC. Like many kinds of insurance, e.g., one year term life insurance, it is protecting you against an event that is highly unlikely to occur but if it does occur it could be costly. Title insurance protects you against claims brought by someone who asserts they had an ownership interest in the property and they were not the seller and thus the seller improperly conveyed the interest to you or the seller owed them some money and the title to the property was given as security for the debt and the seller failed to pay off that debt before selling to you.

Yes, you can easily do a title search on the property yourself but protecting against what may be found in such a search is not the main purpose of title insurance. It is to protect you against things not found in a title search.

An example would be: suppose the seller got a loan from someone, possibly a friend or a loan shark or some third rate loan operation (sometimes it can even be a legitimate bank that blows a filing), and the seller signed a document pledging his DVC interest as security for the loan and the lender never files that document to establish proof of the lien. No one is going to find that lien in a title search. Moreover, that lender's claim against you asserting you should pay off the lien as the new title holder will be extremely weak because the failure to have filed proof of that lien with the recorder's office effectively renders it unforceable against you or the title that has passed (you might even get that lender claiming it did file the proof of lien but the recorder just failed to process it or attach it to the correct property). So if sued you would win but the one thing known in the legal world is many sue without having a real case and the cost of the lawyers to defend and get rid of such case is greatly going to exceed the $125 you pay for title insurance and that title insurance covers you for the defense costs for that case. That is the main purpose of title insurance, to protect from claims to the property that cannot be found in a normal title search and particularly to provide you a defense if such weak claims ever occur. The chances that such a claim will ever be made against you are very low but they are not zero.

 

[BWV Dreamin]

When the seller pays for "closing" in a re-sales purchase transaction, can the buyer request a full title search/insurance, and not a quit-claim deed?

 

[csmommy]

On this contract the Title Insurance is $60.

Waiting for the updated point summary so I can put the closing documents in the mail, she should have it this morning.

 

[drusba]

When the seller pays for "closing" in a re-sales purchase transaction, can the buyer request a full title search/insurance, and not a quit-claim deed?

That the seller may be paying for the closing does not mean there is going to be a quit claim deed. Resales done through brokers are generally going to have warranty deeds. Moreover, if the parties negotiate and agree the seller will pay closing costs that usually includes the cost of title insurance but that can be separately dealt with and paid for by the buyer or chosen not to be purchased.

Otherwise, if in fact the transfer involves a quit claim deed then there will be no title insurance because title insurance companies require a warranty deed and a title search as conditions for issuing the insurance.

 

[JWG]

I think the reality is, always asknfor a current point summary before sending in final docs. It's not perfect, but certainly better than taking someone's word.

 

[Dean]

I would not call title insurance completely useless for DVC. Like many kinds of insurance, e.g., one year term life insurance, it is protecting you against an event that is highly unlikely to occur but if it does occur it could be costly. Title insurance protects you against claims brought by someone who asserts they had an ownership interest in the property and they were not the seller and thus the seller improperly conveyed the interest to you or the seller owed them some money and the title to the property was given as security for the debt and the seller failed to pay off that debt before selling to you.

Yes, you can easily do a title search on the property yourself but protecting against what may be found in such a search is not the main purpose of title insurance. It is to protect you against things not found in a title search.

An example would be: suppose the seller got a loan from someone, possibly a friend or a loan shark or some third rate loan operation (sometimes it can even be a legitimate bank that blows a filing), and the seller signed a document pledging his DVC interest as security for the loan and the lender never files that document to establish proof of the lien. No one is going to find that lien in a title search. Moreover, that lender's claim against you asserting you should pay off the lien as the new title holder will be extremely weak because the failure to have filed proof of that lien with the recorder's office effectively renders it unforceable against you or the title that has passed (you might even get that lender claiming it did file the proof of lien but the recorder just failed to process it or attach it to the correct property). So if sued you would win but the one thing known in the legal world is many sue without having a real case and the cost of the lawyers to defend and get rid of such case is greatly going to exceed the $125 you pay for title insurance and that title insurance covers you for the defense costs for that case. That is the main purpose of title insurance, to protect from claims to the property that cannot be found in a normal title search and particularly to provide you a defense if such weak claims ever occur. The chances that such a claim will ever be made against you are very low but they are not zero.

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.

When the seller pays for "closing" in a re-sales purchase transaction, can the buyer request a full title search/insurance, and not a quit-claim deed?

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.

 

[csmommy]

Fildelity is going to order an updated point summary directly from Disney to confirm the points are banked.

I still do not like that disclaimer from the title company, but what can I do?

Getting a little nervous here ..........she ordered the point summery 10/4 & she still hasn't gotten it. She told me she usually get it by the end of the day or the next morning & we are well past that.

 

[BWV Dreamin]

I am reading if one takes ownership without having full title insurance, then try's to later sell to someone who needs to take a loan, that the banks won't lend because there was no full title insurance prior.

 

[drusba]

I am reading if one takes ownership without having full title insurance, then try's to later sell to someone who needs to take a loan, that the banks won't lend because there was no full title insurance prior.

That is not correct. Banks will not lend unless there is title insurance purchased at the time of lending to protect their loan. That there was not prior title insurance does not rule out a loan to a subsequent buyer.

 

[Dean]

I am reading if one takes ownership without having full title insurance, then try's to later sell to someone who needs to take a loan, that the banks won't lend because there was no full title insurance prior.

I'm not aware of a bank lending with DVC as collateral. The one issue that comes to mind is that I've seen it stated (don't know if it's 100% true or not) is that a quit claim deed in the line makes title insurance impossible to obtain.