Help Please - Resale Title Insurance

[mickeyluvr]

We are getting ready to close on a small (100 point) resale package for HH. The title company has asked if we want title insurance. Does anybody have any experience with this? My husband is not inclined to spend the money, and I'm uncertain if it's really necessary....If it matters, the title company is located in Florida, so I'm not sure if there are any interstate issues here. Thanks!

 

[PJMPA]

The standard 1992 ALTA Owner's Policy of Title Insurance covers you for a loss you may suffer, up to the purchase price for the add-on, in the event one of the followings things occur:

 

[PJMPA]

The standard 1992 ALTA Owner's Policy of Title Insurance covers you, up to the amount of the purchase price for the add-on, in the event any of the following occur:
1. Title to the real estate interest you are purchasing is found to be vested in somebody other than you;
2. A defect in title or a lien or encumbrance is found to exist in the title;
3. Your title is determined to be unmarketable;
4. You lose a right of physical access to the property.
The coverages will be subject to all existing recorded agreements affecting DVC which are found in the Prospectus. As to whether it is worth it, the answer is YES. Although the risk of a claim is small, you could lose your investment without it. The cost of the insurance should be minimal. I would buy it.

 

[Firefighter Mickey]

I'm going to say that I think it depends on your comfort level for the amount of money you are investing.

As I understand it, as part of the sales process, the closing/title company will perform a title search, to make sure that the title isn't clouded. Now, it is possible for that search to miss something - so you could end up closing and then later find out that there is some issue with the real estate interest you bought which would potentially keep you from using that real estate interest - this is what (as I understand it) title insurance protects you from - or at least will compensate you for.

Now, in the case of a $7,000 dollar purchase (or so), the question really becomes: are you willing to throw away $7,000 in the unlikely case that something happens?

Now, if we're talking about a $200,000 investment in a house - yes, $300 for title insurance is worth it for the peace of mind. I cannot afford to just walk away from $200,000. A $7,000 loss, while somewhat painful would not be the end of the world, and there may still be legal action I could take to recoup my investment even without title insurance.

I'm pretty certain that we did not purchase title insurance with our resale, but we were made aware that it is available (they have to tell you about it).

 

[Doctor P]

The smaller the value of the insured event, the less value insurance typically is. Generally, you should only insure large value, infrequent events. The likelihood of any title problem is likely to be pretty small, so I probably would not insure a 100 pt. add on because you still would have other recourse.

 

[drusba]

Buy it. The statement above about the closing/title company performing a title search to assure title is good is something that company does only if you are buying title insurance (in fact part of the price of the insurance is for doing that search). For the price of the insurance, it is not worth the risk going without. Also, if something does go wrong (for example there was a lien on the seller's interest that you did not know about which takes priority over your interest) you cannot assume you will have any recourse other than the insurance. That seller, after closing, will usually be liable to you only if he committed knowing fraud or he expressly, in writing, gives a warranty of title that states it survives the closing. That title insurance covers you for the amount you paid in the sale if title turns out to be bad; that's its "indemnity" coverage. It also covers you, in addition to that amount, for the costs of defending a lawsuit that might later be brought against you by a lienholder on the seller's interest who is seeking to take away your interest; that's the policy's "defense" coverage. Costs of defending that suit (for a lawyer, court fees, etc.) can easily be more, even double, the amount of the "indemnity" coverage. In other words, don't assume your only loss if you do not buy the insurance is the price you paid in the sale.

 

[jctwizzer]

Because of a lawyer's ineptness, I ended up asking one of the reputable title companies to handle the recording of an OKW purchase we had made approx. one year earlier. When I asked about title insurance, the individual I was dealing with stated that all Disney property had be researched in depth and they didn't think title ins. was necessary. We have not had any problems.. If no insurance makes you uncomfortable, then I'd get it....otherwise

 

[Cap]

For a small resale, I wouldn't get title insurance. I'd make sure that Disney accepted the title transfer and put me in their computer as the DVC member for those points, and I'd make very sure that I got the recorded deed promptly. Other than those actions, I wouldn't get insurance unless I didn't think I was dealing with a reputable seller or agent.

I might stop at the County Registrar of Deeds on some future trip just to check the title records so I'd know, after the fact, of any title defect.

Bottom line, I didn't get title insurance for my resale purchase and haven't lost sleep over it.

 

[mickeyc]

It is interesting that you brought up this topic. The concept of title insurance is too protect your investment. I recently purchased a timeshare resale in Orlando--not DVC--I am already a member and wreslted with this issue. The timeshare companys I consulted were Prodox and the Timeshare Closing Service. Prodox closing cost service is very reasonable $ 200, which includes recording the deed, holding the money in escrow, etc. However, when I inquired concerning the title insurance they wanted to charge $ 400, which I thought was excessive. The TCS charges a fee based upon the cost of the timeshare you are purchasing in my case TCS was cheaper and I received title insurance. The total fee was $ 400 including the insurance.

I should mention this is a private sale and I guess I want peace of mind that I will not own a timeshare with someone I don't know in the event it was a divorce circumstance.
Everyone's abilty to accept some risk is different. If the cost of the purchase was very cheap $ 2000 or less I probably would not purchase the insurance.

There is very good information available on the TUG ( timeshare user group) website which is www.tug2.net. Good luck this is a very personal decision.