Resale and Title Insurance

[buzz5985]

Is title insurance really needed? I just received a letter from my closing company asking if I require title insurance. I never thought about it. Any opinions? The additional cost to closing would be $250-$400!!!!! Yikes. The cheapstake in me says no. LOL The cynic thinks this is just a way to make a quick buck by the closing company and the serious person in me is struggling to make a rational decision. Kind of hard when I left for work at Noon, arrived home at Midnight, saw this letter in the mail, and I am braindead at this point. LOL Any advice is greatly appreciated.

 

[Cap]

For a small resale from a reputable broker, I'd not pay for the title insurance. I would make sure that my deed came back with the Registrar of Deed's stamp on it, indicating it had indeed been recorded. I would expect that the transfer company did not release the payment from escrow until the deed was recorded.

I don't think that Disney would update their records to show you as the new owner of the contract, if the listed seller was not in their records as the previous owner. However there is no guarantee. I'm just too frugal (read "cheap") to spend 5% - 10% of the purchase price for title insurance on a small contract. I view it's kind of like deciding to self-insure.

 

[Dean]

That sounds very high for title insurance. I'd figure more in the range of $150 or so. If it's a full contract of, I would take title insurance but ask about other companies. The $450 that gets thrown around as usual, generally includes title insurance as well, at least that's my understanding.

 

[ronw]

The reputable broker has(should have) little to do with your decision to buy title insurance. Nor does a registerd deed! What title insures does is protect you in the event the seller did not have the RIGHT to transfer that title - in a nasty, contested divorce for example. The title company supposedly researchs the title history and guarantees that it is a "clean" transfer. In practice, I believe proceeds from the title insurance premium are simply used to pay the claims that may arise.

 

[CarolMN]

I agree with the previous poster, ronw. The risk isn't that Disney didn't have title, but that the owners between you and Disney didn't have a clear title to pass on. Since divorce/death are frequently the reasons DVC memberships get sold, there is concern that the person(s) selling may not have had a clear legal title to sell. The broker has no way to know for sure that there is a clear title, especially if the membership has been sold/resold multiple times. The risk increases with the number of times the membership has been transferred. In other words, if you are going to be the "second" owner, you will have less risk that if you are going to be the 3rd owner and etc.

I would get the insurance UNLESS you are willing to risk losing all your $$. For a small contract, the risk may be reasonable. For a large contract, it may not. I also think it can pay to shop around for title insurance. JMHO.

 

[drusba]

The numbers given by the broker sound quite high for title insurance which should run under $200. Whether you get it is a matter of choice. It protects against claims by others asserting your legal title to the property is not valid or is subject to liens or other rights created before you acquired title. The scenarios:

1. Most likely: the seller has title free and clear of liens (except perhaps a mortgage that will be paid off at closing), the property is not currently subject to any title dispute (such as a divorce proceeding might create), and you will will never face a problem.

2. Outside chance: something has happened at least creating a possibility of a title issue or a lien; for example, there is a divorce proceeding going on where ownership of the property is at issue, or the seller signed over rights to the property to someone else like a relative, or the seller had a gambling problem and paid off his debts by signing a paper granting any interest in his DVC property to someone named Knife. Those disputable intersts may or may not be recorded with the registrar of deeds. If unrecorded you likely win a future court battle over title anyway. However, that is the kicker. Someone who thinks he has a prior interest in the property sues you to get back title even though that person may have a weak case. Your legal fees to defend that case even though you may be entirely in the right and ultimately win: $10,000 to $30,000. Title insurance indemnifies you for what you paid for the property if title proves to be invalid. In addition, and far more more important, Title insurance defends you in any claim over title and pays all those attorneys fees and court costs.

Personally, I would buy it; others are more willing to take the risks.

 

[ClarabelleCow]

isn't title insurance usually included in the costs of closing??? hope so!

 

[buzz5985]

I'm buying the resale through The Timeshare Store, so I hope everthing is OK. Time will tell. Thanks for all the great advice.

Janis

 

[PJMPA]

I co-own a Title Insurance Agency in Pennsylvania. We write for First American Title Insurance Company - same company DVC uses. The standard 1990 ALTA (American Land Title Assn) Form Policy insures 4 things:
1. Title to the real estate interest you are purchasing is properly vested in you. i.e. you, as opposed to somebody else is the true owner;
2. There are no liens or encumbrances affecting the title that are not disclosed to you in the policy. Ask your closing agent to provide a "marked-up" title commitment to you before you conclude the purchase so you know what encumbrances will remain against the title after closing;
3. That you have a right of access to the property - not really an issue in this case;
4. That your title is "marketable" i.e. that you can sell your interest without incurring loss or expense to fix a title defect nor will the value of the title be diminished because of a title defect. Like any insurance, it's value is only measured if you have a claim. The liklihood of a claim is small, but so is the relative cost on a one-time basis.

 

[Dean]

I went back and checked on my BW resale purchase in May. The estimated closing including title insurance was $560. I don't have the actual as it was ALL paid by the seller. My Marriott Grande Ocean (similar or higher value) was $480 closing plus $125 title insurance last fall.

 

[robinb]

Originally posted by buzz5985
I'm buying the resale through The Timeshare Store, so I hope everthing is OK. Time will tell. Thanks for all the great advice.

Janis

This really doesn't make any sense. The Timeshare Store has been selling resales for years. I have bought 2 resales from them, one 5 years ago and another a couple months ago and both sales included title insurance from the get-go. They should have quoted you closing costs including title insurance. My guess is the closing company is messed up somewhere. Call your salesperson at The Timeshare Store and they should work things out for you.

 

[Dean]

Sometimes the person that writes the contract will just put no title insurance and never ask. Go back and look at your original contract and it should have a yes/no box for title insurance. If it says no, contact the closing agent and see about adding it on.

 

[dcfromva]

buzz5985,

I recently made an inquiry for a resale at HH. The estimated title insurance cost quoted to me was $250 (this was in addition to the other closing costs).
I'm glad you asked this question--I figured I would buy the ins, but I hadn't even thought of some of the issues that might result from not having it....


-DC

 

[buzz5985]

I called Jerry at the Timeshare Store today. The difference in price is because HH is in South Carolina. And in South Carolina there is a state law that ALL Title Insurance policies must be looked at by an Attorney. Therefore the big difference in price.
Thanks for all your help.

Janis

 

[SueM in MN]

We were saved from a bad situation last year by a title search. We were buying an add on and had sent in the final check and everything. The title check showed that the DH who was selling the points was selling them in a divorce situation without his DW's knowledge. So, if the sale had gone thru without that being noticed, our title insurance would have saved us. We were able to buy another contract (minus problems) a few months later.

 

[Dean]

I paid $125 on a Marriott timeshare worth as much or more than most DVC contracts are going for. This was last year, late summer or early fall.