Owners Title Insurance - Super Heavy Handed Pitch

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OnTrack
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by OnTrack » Wed Apr 11, 2018 11:18 pm

Be sure to check the policy exclusions; your lawyer should have done this. Any exclusions that are not specific to the property should be removed. Also, is the policy a standard or extended (ALTA) policy. Extended is better. If you pay extra for the extended policy, be sure you actually get it. Keep a copy of the policy, even if you later sell the property.

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Silly Wabbit
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by Silly Wabbit » Thu Apr 12, 2018 1:46 am

talzara wrote:
Wed Apr 11, 2018 2:02 pm
topofthebellcurve wrote:
Wed Apr 11, 2018 12:12 pm
talzara wrote:
Wed Apr 11, 2018 12:03 pm
Insurance loss ratios are always calculated on the gross premium. The expense ratio on title insurance is 85% to 90%.

The Loss + DCC ratio is usually 5-10%. It's 5% in normal years, and it went up to 10% during the 2007-2009 subprime mortgage crisis. This number includes legal costs, so the actual loss is even lower than that.
So what do you think the expected value is for each $1 spent on title insurance?
5-10%. The legal costs are included in the expected value. If you self-insure, then you would have to pay the legal costs too.

My point was that even 5-10% is an overestimate of actual losses. The insurance companies are disclosing a loss + DCC ratio rather than a pure loss ratio.
How does this, 5-10%, compare to other types of insurance? An earlier post cited something like 90%. Accurate?

johnnyc321
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by johnnyc321 » Thu Apr 12, 2018 4:15 am

Buy the insurance.

I'm a lawyer and even though I do not concentrate my practice on real estate, I've seen quite a few title insurance claims. I've also been hired twice in the last year by title insurance companies to defend these cases. Every single one of them was due to an error that occurred during the closing or search by the examiner.

If you decide to forego the insurance, be prepared to pay out 50k to 100k in attorneys fees and costs defending your title in addition to whatever your loss on the property is. You'll probably be paying a divorce attorney too.

ncbill
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by ncbill » Thu Apr 12, 2018 11:57 am

topofthebellcurve wrote:
Tue Apr 10, 2018 8:46 pm
That said, I think this topic deserves a more rigorous analysis than I'm seeing here, and more rigorous than I've come to expect of BH'ers in every other aspect of their financial life. Consider a similar claim about protecting large amounts of assets: "Don't you want a professional financial adviser to look after your $1MM++ retirement? You want to do this yourself? You think that's a good way to save money? It's only 1-2% a year!"
I think there are a couple of flaws in this part of your argument:

1. One-time fee instead of annually like with a AUM load.

2. You really can't DIY for less than the cost of the insurance.

And yes, shop around but make sure you get the "extended" insurance other posters recommend.

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Thu Apr 12, 2018 12:59 pm

Silly Wabbit wrote:
Thu Apr 12, 2018 1:46 am
How does this, 5-10%, compare to other types of insurance? An earlier post cited something like 90%. Accurate?
Health insurance comes the closest, since the ACA requires a loss ratio of at least 80%. Insurance companies usually aim for the low 80s. They try not to get to 90%.

Auto insurance has a loss ratio around 65%, and homeowners insurance is around 60%. GEICO, Progressive, and USAA can go 5-10% higher. A 90% loss ratio would be a bad year.

It doesn't change the argument, though. 5-10% is still much smaller than 60%.

criticalmass
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by criticalmass » Thu Apr 12, 2018 1:31 pm

I used Entitle Direct on a Massachusetts property. I saved a bundle compared to the charges from everyone else's title insurance. They were founded (long before internet) as Guardian National Title Insurance Company, and were purchased by a Philadelphia company last month.

Redfin is now doing something similar in many states (discount title insurance) with a product they call Title Forward.

Why are they cheaper ? Because they don't pay the outrageous commissions that the other insurance companies pay. Note that this fact frustrates title companies and attorneys expecting their fat kickback. But you have the right to choose the title insurer of your choice under federal law, and don't let anyone try to steer you to their preferred provider. Also, you can save more by using the same insurance company when refinancing, or sometimes when keeping the same company as the prior owner during a purchase. Ask about Reissue rates.

This article explains more:
https://www.housingwire.com/articles/29 ... hake-it-up

In Massachusetts, if the land has gone through land court claims, it is "registered" instead of recorded. This means the land court guarantees the title. I would argue that this diminishes the utility of title insurance, but consult with your attorney (preferably one not about to grab a kickback from the insurance company).

bhburnsy
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by bhburnsy » Thu Apr 12, 2018 1:52 pm

johnnyc321 wrote:
Thu Apr 12, 2018 4:15 am
Buy the insurance.

I'm a lawyer and even though I do not concentrate my practice on real estate, I've seen quite a few title insurance claims. I've also been hired twice in the last year by title insurance companies to defend these cases. Every single one of them was due to an error that occurred during the closing or search by the examiner.
How many of these resulted in a total loss of equity for the policy holder that was then covered by the policy? Seems like we always hear about "small" issues that are resolved without a total loss of the property to the owner (i.e., they lost the property and had to move).

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celia
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by celia » Thu Apr 12, 2018 1:53 pm

topofthebellcurve wrote:
Wed Apr 11, 2018 11:53 am
Hi everyone! Still listening, as is my wife.
. . .
My wife had a useful interpretation of this thread: "I've never seen BH be so unanimous on anything. This makes me want to buy it." So I now have your strong recommendations plus my wife's desire, and the true tail risk of not just losing $400K+ but having to hear "I told you so" for the rest of my life :happy
As another wife, it also occurred to me today that the women are more likely to survive their husbands. With that in mind, I think the wife should have more say in this so she isn't stuck with a claim after you are gone. Who wants to deal with that in old age?

We are now retired, have owned the same house for over 40 years, and have other things to worry about instead of property claims. Gotta go pay my earthquake insurance premium now . . . :beer

BuffaloBill21
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by BuffaloBill21 » Thu Apr 12, 2018 2:35 pm

OP, I'm a real estate attorney at a firm in Boston. First, congrats on the purchase! I hope you enjoy your new home :sharebeer :sharebeer I know I'm not at the firm you're working with because we don't issue letters like that. Given your OP and description of chain of title, particularly the recency of the probate, I do agree with the consensus that getting title insurance in this instance would be particularly wise. As a side note, I do see owner's title policies come into play on a fairly regular basis, though it's typically for minor issues such as incorrect discharges of prior mortgages (which in most cases could be resolved for a couple hundred bucks if you didn't have title insurance).

I would tell the law firm that issued the letter, especially the part where "We also acknowledge that Law Office of _____ is not liable for any title issues that may arise..." to pound sand and that you won't sign that as is. I don't want to venture into the legal advise arena here, so I will raise the question of what if they were negligent in their search? Should they still be free of liability? Additionally, I can tell you that such a waiver is not a required closing document for the bank. If you choose to decline Owner's title and refuse to sign the letter I can say with virtual certainty that they will still close the loan. They will get their settlement fee and their cut of lenders title insurance in addition to your purchase and sale fee (if applicable).

Another potential idea, you could ask them to discount the rate? Book rate on Owner's title insurance is $4/$1000 (with the major companies), Lender's issued simultaneously with Owners is a flat fee of $175. Ask if they will do the Owner's policy at $3/$1000. That may make it a little easier to swallow on your end. We discount title rates, particularly at higher purchase prices.
criticalmass wrote:
Thu Apr 12, 2018 1:31 pm
In Massachusetts, if the land has gone through land court claims, it is "registered" instead of recorded. This means the land court guarantees the title. I would argue that this diminishes the utility of title insurance, but consult with your attorney (preferably one not about to grab a kickback from the insurance company).
I don't know that it diminishes the utility of title insurance. With registered land the Commonwealth of Mass. is supposed to reimburse the property owner for any losses. The reason why I write "supposed to" is because there is $0.00 in the Commonwealth's fund. That would leave someone in the same situation as if they were to not have title insurance on recorded land.

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Thu Apr 12, 2018 4:05 pm

BuffaloBill21 wrote:
Thu Apr 12, 2018 2:35 pm
criticalmass wrote:
Thu Apr 12, 2018 1:31 pm
In Massachusetts, if the land has gone through land court claims, it is "registered" instead of recorded. This means the land court guarantees the title. I would argue that this diminishes the utility of title insurance, but consult with your attorney (preferably one not about to grab a kickback from the insurance company).
I don't know that it diminishes the utility of title insurance. With registered land the Commonwealth of Mass. is supposed to reimburse the property owner for any losses. The reason why I write "supposed to" is because there is $0.00 in the Commonwealth's fund. That would leave someone in the same situation as if they were to not have title insurance on recorded land.
Why does there need to be a fund? The stakes are so small that the Commonwealth of Massachusetts can just pay it out of general revenues.
The 14 title insurance companies operating in Massachusetts pulled in $252 million in premiums last year and paid out just 5 percent, or $12.7 million, in losses and expenses from claims. ... Roughly 20 percent of the state’s land is registered land.

https://commonwealthmagazine.org/econom ... insurance/
Even if registered land has the same claims frequency as recorded land, there should only be about $3.2 million in claims each year.

jalbert
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Thu Apr 12, 2018 4:35 pm

If a previous owner has an outstanding lien that should have been required to be cleared before change of title, either the current owner of the property or the lien-holder is going to take a loss of some assets they should have been entitled to have.

How does a property registry help fix that? Either the law says the lien stays with the property after sale or it doesn’t.
Risk is not a guarantor of return.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by LadyGeek » Thu Apr 12, 2018 7:14 pm

This thread is now in the Personal Finance (Not Investing) forum (insurance).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

topofthebellcurve
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by topofthebellcurve » Thu Apr 12, 2018 9:30 pm

OnTrack wrote:
Wed Apr 11, 2018 11:18 pm
Be sure to check the policy exclusions; your lawyer should have done this. Any exclusions that are not specific to the property should be removed. Also, is the policy a standard or extended (ALTA) policy. Extended is better. If you pay extra for the extended policy, be sure you actually get it. Keep a copy of the policy, even if you later sell the property.
Great advice - thank you. I'll be sure to do this.

topofthebellcurve
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by topofthebellcurve » Thu Apr 12, 2018 9:31 pm

johnnyc321 wrote:
Thu Apr 12, 2018 4:15 am
Buy the insurance.

I'm a lawyer and even though I do not concentrate my practice on real estate, I've seen quite a few title insurance claims. I've also been hired twice in the last year by title insurance companies to defend these cases. Every single one of them was due to an error that occurred during the closing or search by the examiner.

If you decide to forego the insurance, be prepared to pay out 50k to 100k in attorneys fees and costs defending your title in addition to whatever your loss on the property is. You'll probably be paying a divorce attorney too.
I quoted your last line to my wife. She chuckled. The risk is more an infinite expanse of "I told you so" than divorce :D

topofthebellcurve
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by topofthebellcurve » Thu Apr 12, 2018 9:32 pm

criticalmass wrote:
Thu Apr 12, 2018 1:31 pm
I used Entitle Direct on a Massachusetts property. I saved a bundle compared to the charges from everyone else's title insurance. They were founded (long before internet) as Guardian National Title Insurance Company, and were purchased by a Philadelphia company last month.

Redfin is now doing something similar in many states (discount title insurance) with a product they call Title Forward.

Why are they cheaper ? Because they don't pay the outrageous commissions that the other insurance companies pay. Note that this fact frustrates title companies and attorneys expecting their fat kickback. But you have the right to choose the title insurer of your choice under federal law, and don't let anyone try to steer you to their preferred provider. Also, you can save more by using the same insurance company when refinancing, or sometimes when keeping the same company as the prior owner during a purchase. Ask about Reissue rates.

This article explains more:
https://www.housingwire.com/articles/29 ... hake-it-up

In Massachusetts, if the land has gone through land court claims, it is "registered" instead of recorded. This means the land court guarantees the title. I would argue that this diminishes the utility of title insurance, but consult with your attorney (preferably one not about to grab a kickback from the insurance company).
Thank you! I checked Entitle Direct but their quote came out roughly the same at 4% for lenders + owners title. Perhaps I'm misunderstanding the quote. I'll also look into Redfin's offering.

topofthebellcurve
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by topofthebellcurve » Thu Apr 12, 2018 9:34 pm

celia wrote:
Thu Apr 12, 2018 1:53 pm

As another wife, it also occurred to me today that the women are more likely to survive their husbands. With that in mind, I think the wife should have more say in this so she isn't stuck with a claim after you are gone. Who wants to deal with that in old age?
This is a morbid and accurate perspective. I'll be sure to pass it on to the DW :happy

topofthebellcurve
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by topofthebellcurve » Thu Apr 12, 2018 9:39 pm

BuffaloBill21 wrote:
Thu Apr 12, 2018 2:35 pm
OP, I'm a real estate attorney at a firm in Boston. First, congrats on the purchase! I hope you enjoy your new home :sharebeer :sharebeer I know I'm not at the firm you're working with because we don't issue letters like that. Given your OP and description of chain of title, particularly the recency of the probate, I do agree with the consensus that getting title insurance in this instance would be particularly wise. As a side note, I do see owner's title policies come into play on a fairly regular basis, though it's typically for minor issues such as incorrect discharges of prior mortgages (which in most cases could be resolved for a couple hundred bucks if you didn't have title insurance).

I would tell the law firm that issued the letter, especially the part where "We also acknowledge that Law Office of _____ is not liable for any title issues that may arise..." to pound sand and that you won't sign that as is. I don't want to venture into the legal advise arena here, so I will raise the question of what if they were negligent in their search? Should they still be free of liability? Additionally, I can tell you that such a waiver is not a required closing document for the bank. If you choose to decline Owner's title and refuse to sign the letter I can say with virtual certainty that they will still close the loan. They will get their settlement fee and their cut of lenders title insurance in addition to your purchase and sale fee (if applicable).

Another potential idea, you could ask them to discount the rate? Book rate on Owner's title insurance is $4/$1000 (with the major companies), Lender's issued simultaneously with Owners is a flat fee of $175. Ask if they will do the Owner's policy at $3/$1000. That may make it a little easier to swallow on your end. We discount title rates, particularly at higher purchase prices.
Great to have such an informed respondent!

How do you recommend I handle the dynamic with the lawyer of rejecting the letter waiver? Do I just say I won't sign it in advance of the close (and so risk derailing the closing, perhaps) or refuse on the spot at signing of the other documents? I see no upside to me signing this document, nor do I understand why it would be legally necessary. Given the dominant wisdom of this thread, I am very likely now to purchase the insurance, so I will assume the letter to be moot. But, if I decide not to get it, how do I minimize risk to the closing?

I asked if the price I was being given was the lowest and best quote and if there was room for negotiation, but they said no. I call B.S. since I know they're getting a huge kickback. Do you have a recommendation for a title insurance provider for the Boston area?

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by cherijoh » Fri Apr 13, 2018 7:00 am

topofthebellcurve wrote:
Tue Apr 10, 2018 8:46 pm
That said, I think this topic deserves a more rigorous analysis than I'm seeing here, and more rigorous than I've come to expect of BH'ers in every other aspect of their financial life. Consider a similar claim about protecting large amounts of assets: "Don't you want a professional financial adviser to look after your $1MM++ retirement? You want to do this yourself? You think that's a good way to save money? It's only 1-2% a year!"
You are kidding right? It is very difficult to do a "rigorous analysis" of unspecified and unknowable risks. Your question isn't analogous to whether or not it makes sense to use a professional advisor - especially since this is a one time fairly negligible cost. IMO the analogous financial question is "Will I amass a bigger nest egg by the time I retire in 20xx if I use an AA with X% or Y% stocks?" In both cases, the decision you make can only be evaluated in hindsight.

cantos
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by cantos » Fri Apr 13, 2018 9:34 am

topofthebellcurve wrote:
Tue Apr 10, 2018 8:46 pm
That said, I think this topic deserves a more rigorous analysis than I'm seeing here, and more rigorous than I've come to expect of BH'ers in every other aspect of their financial life. Consider a similar claim about protecting large amounts of assets: "Don't you want a professional financial adviser to look after your $1MM++ retirement? You want to do this yourself? You think that's a good way to save money? It's only 1-2% a year!"
I don't get this math. $2,000 is 0.2% of $1 million. That is a tiny amount to pay to protect the loss.

You seem to be upset that title insurers make a profit, or that the profit margin is higher than you'd like. The better solution, I'd think, would be to invest in title insurance.

criticalmass
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by criticalmass » Fri Apr 13, 2018 9:37 am

topofthebellcurve wrote:
Thu Apr 12, 2018 9:32 pm
criticalmass wrote:
Thu Apr 12, 2018 1:31 pm
I used Entitle Direct on a Massachusetts property. I saved a bundle compared to the charges from everyone else's title insurance. They were founded (long before internet) as Guardian National Title Insurance Company, and were purchased by a Philadelphia company last month.

Redfin is now doing something similar in many states (discount title insurance) with a product they call Title Forward.

Why are they cheaper ? Because they don't pay the outrageous commissions that the other insurance companies pay. Note that this fact frustrates title companies and attorneys expecting their fat kickback. But you have the right to choose the title insurer of your choice under federal law, and don't let anyone try to steer you to their preferred provider. Also, you can save more by using the same insurance company when refinancing, or sometimes when keeping the same company as the prior owner during a purchase. Ask about Reissue rates.

This article explains more:
https://www.housingwire.com/articles/29 ... hake-it-up

In Massachusetts, if the land has gone through land court claims, it is "registered" instead of recorded. This means the land court guarantees the title. I would argue that this diminishes the utility of title insurance, but consult with your attorney (preferably one not about to grab a kickback from the insurance company).
Thank you! I checked Entitle Direct but their quote came out roughly the same at 4% for lenders + owners title. Perhaps I'm misunderstanding the quote. I'll also look into Redfin's offering.
Entitle Direct was recently purchased by a publicly traded company, so hopefully they aren't destroying their business model to temporarily boost quarterly earnings by raising rates. That said, be sure you are comparing apples to apples. A reissue policy can save you a lot. Also, feel free to use your lowest insurance quote for leverage with other companies and title closing companies (attorneys in Massachusetts).

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Fri Apr 13, 2018 10:54 am

jalbert wrote:
Thu Apr 12, 2018 4:35 pm
If a previous owner has an outstanding lien that should have been required to be cleared before change of title, either the current owner of the property or the lien-holder is going to take a loss of some assets they should have been entitled to have.

How does a property registry help fix that? Either the law says the lien stays with the property after sale or it doesn’t.
Liens stay with the property after the sale.

A land registry simply guarantees that all liens are in the database. If the land registry shows clear title, then the government guarantees your title. If a lien is later discovered, then the government will pay it off and sue the previous owner to recover.

With title insurance, your title insurer would have done that.

Without title insurance and without a land registry, you would have to pay it off yourself. Then, if you have a warranty deed, you can sue the previous owner to recover.

BuffaloBill21
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by BuffaloBill21 » Fri Apr 13, 2018 11:13 am

talzara wrote:
Thu Apr 12, 2018 4:05 pm
BuffaloBill21 wrote:
Thu Apr 12, 2018 2:35 pm
criticalmass wrote:
Thu Apr 12, 2018 1:31 pm
In Massachusetts, if the land has gone through land court claims, it is "registered" instead of recorded. This means the land court guarantees the title. I would argue that this diminishes the utility of title insurance, but consult with your attorney (preferably one not about to grab a kickback from the insurance company).
I don't know that it diminishes the utility of title insurance. With registered land the Commonwealth of Mass. is supposed to reimburse the property owner for any losses. The reason why I write "supposed to" is because there is $0.00 in the Commonwealth's fund. That would leave someone in the same situation as if they were to not have title insurance on recorded land.
Why does there need to be a fund? The stakes are so small that the Commonwealth of Massachusetts can just pay it out of general revenues.
The 14 title insurance companies operating in Massachusetts pulled in $252 million in premiums last year and paid out just 5 percent, or $12.7 million, in losses and expenses from claims. ... Roughly 20 percent of the state’s land is registered land.

https://commonwealthmagazine.org/econom ... insurance/
Even if registered land has the same claims frequency as recorded land, there should only be about $3.2 million in claims each year.
I don't know of an instance when the state paid a registered land title claim, I could be wrong but relying upon them I think would be misguided and at the very least a LONG, expensive process. It takes months and months to get anything back from land court, have you ever seen a title examiners office at the land court?? It's a miracle they can find anything. That's just my 2 cents, reasonable minds can differ.

[/quote]

Great to have such an informed respondent!

How do you recommend I handle the dynamic with the lawyer of rejecting the letter waiver? Do I just say I won't sign it in advance of the close (and so risk derailing the closing, perhaps) or refuse on the spot at signing of the other documents? I see no upside to me signing this document, nor do I understand why it would be legally necessary. Given the dominant wisdom of this thread, I am very likely now to purchase the insurance, so I will assume the letter to be moot. But, if I decide not to get it, how do I minimize risk to the closing?

I asked if the price I was being given was the lowest and best quote and if there was room for negotiation, but they said no. I call B.S. since I know they're getting a huge kickback. Do you have a recommendation for a title insurance provider for the Boston area?
[/quote]

Legally the document is not necessary. I would suggest reaching out in advance (better than a surprise at the closing table) and just say very politely that you will acknowledge receipt of their letter advising of the risks but you will not provide an indemnity.

Honestly, prices are pretty much the same across companies (at least the ones we deal with). Agents (the closing attorney) have discretion to a degree, so the time to shop has passed and was more applicable when you shopped for attorney services. They couldn't change companies now if they wanted to without a delay in closing (they would need a new commitment, cpl, etc. which would send things back through the banks underwriting).

Hope all goes well for you today!

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Fri Apr 13, 2018 11:27 am

BuffaloBill21 wrote:
Fri Apr 13, 2018 11:13 am
I don't know of an instance when the state paid a registered land title claim, I could be wrong but relying upon them I think would be misguided and at the very least a LONG, expensive process. It takes months and months to get anything back from land court, have you ever seen a title examiners office at the land court?? It's a miracle they can find anything. That's just my 2 cents, reasonable minds can differ.
Title insurance costs 0.1% to protect against 0.005% risk of loss.

If the land is registered, then the risk of loss goes down to 0%, but you have to pay legal costs.

When the probabilities are this low, who cares? You can self-insure the legal costs.

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Fri Apr 13, 2018 12:41 pm

topofthebellcurve wrote:
Thu Apr 12, 2018 9:32 pm
Thank you! I checked Entitle Direct but their quote came out roughly the same at 4% for lenders + owners title. Perhaps I'm misunderstanding the quote. I'll also look into Redfin's offering.
I think you mean 0.4% instead of 4%.

The whole system is ridiculous. Here's what it costs to get property into the Massachusetts land registry:
Filing a Complaint $775.00 + 1/10 of 1% Assessed Valuation
(1/10 of 1% not applicable in "confirmation only" cases)
(includes $240.00 filing fee, $15.00 surcharge, $70.00 original plan, $450.00 deposit toward other costs)

Publication Costs Case Based

Entry of Judgment of Registration 3/8 of 1% of Assessed Value
($70.00 minimum, $2,800.00 maximum)
(3/8 of 1% not applicable in "confirmation only" cases)

https://www.mass.gov/service-details/la ... iling-fees
However, the incentives are all wrong. You can't register the land because you don't own it yet. The seller doesn't want to hold up the closing for months while you wait for a court-appointed title examiner to file a report. You could buy the land first and then put it into the registry, but then you'd be exposed to title risk until the court rules.

The Canadians solved this problem by requiring all land to go into the registry the next time it was sold. This gave sellers an incentive to register the land preemptively so that it wouldn't hold up the closing.

jalbert
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Fri Apr 13, 2018 3:10 pm

Their business model operates on huge incentives to home closing attorneys and realtors. 40% of fees go into kickbacks, 10% general administrative, and 40% profit.
Such kickbacks are illegal in most states. I don’t know about MA.
Risk is not a guarantor of return.

FlyerJack
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by FlyerJack » Fri Apr 13, 2018 4:59 pm

If you decide to forego the insurance, be prepared to pay out 50k to 100k in attorneys fees and costs defending your title in addition to whatever your loss on the property is.....
Good advice in this thread. Just two thoughts:

First, I agree (as a litigator) that $12k seems low as an estimate of litigation cost, even aside from the potential substantive loss.

Second, the statistics regarding the low percentage of paid claims, etc., determine how insurance companies price their products. Those statistics do not predict your own potential loss!
So of each dollar I give them, they expect to pay out $0.05.
In the letter, your lawyer laid out certain factual issues that are specific to your situation. It sounds like a risker-than-average chain of title to me, but I'm not your lawyer and I may be completely wrong. But conceptually, imagine that Doctor tells Patient that Patient has five specific risk factors for brain cancer. Now, the statistics (used by health insurance companies to set their rates) say that less than 1% of Americans will get brain cancer, but those statistics don't counteract what Doctor told Patient, nor do they offer any predictive value for Patient's specific situation with Patient's specific risks.

J295
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by J295 » Fri Apr 13, 2018 5:57 pm

I didn’t read all the posts but will offer this for consideration.

If you don’t obtain an owner’s policy, expect the premium for the lenders policy to increase.

If I’m the lawyer, it doesn’t matter a great deal to me whether or not you sign the waiver. If you refuse I will just give you a letter that says the same things and know that you were advised and this cannot come back later and claim you were not warrant of the risks.

I have substantial experience and knowledge regarding legal issues relating to real estate, bank lending, and title insurance. My sense is many of the posters don’t have material experience and some of the posters quickly drop in to do it yourself mode, and because something has a charge (realtor, lawyer, financial advisor, accountant, etc ) it is a scam.

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Fri Apr 13, 2018 6:19 pm

jalbert wrote:
Fri Apr 13, 2018 3:10 pm
Their business model operates on huge incentives to home closing attorneys and realtors. 40% of fees go into kickbacks, 10% general administrative, and 40% profit.
Such kickbacks are illegal in most states. I don’t know about MA.
The kickbacks are legal in most states, including Massachusetts.

The kickback is legally considered a commission. Depending on the state, it may be the real estate agent or the lawyer who sells the insurance and gets the kickback. In Massachusetts, it's the lawyer.

jalbert
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Fri Apr 13, 2018 6:42 pm

From: https://www.fraudguides.com/consumers/r ... -kickback/
What is illegal is a title agent kicking back (returning) a portion of the fee to realtors or lenders who referred the business.
Risk is not a guarantor of return.

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Fri Apr 13, 2018 9:29 pm

jalbert wrote:
Fri Apr 13, 2018 6:42 pm
From: https://www.fraudguides.com/consumers/r ... -kickback/
What is illegal is a title agent kicking back (returning) a portion of the fee to realtors or lenders who referred the business.
You're talking about kickbacks paid by the title agent to the real estate agent. Those are illegal.

Kickbacks are legal when they're called "commissions" and paid by the insurance company to the title agent.

The OP is paying $2300 for owner's title insurance. According to the article in Commonwealth Magazine, 65% to 85% of it is being paid to his lawyer as a commission.

Keep in mind that the bank is already forcing him to buy a lender's policy. His lawyer has already been paid the commission on the lender's policy, and a title search has already been run. He's paying his lawyer an additional $1500 to $1950 of commission, and for what? The right to buy $200 worth of title insurance.

State Farm agents don't charge you $7,500 for the right to buy $1,000 worth of auto insurance.

escape goat
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by escape goat » Fri Apr 13, 2018 10:49 pm

It sounds like it may be a moot point for OP now, but just wanted to add my $0.02. Instead of trying to save by not buying the owner's policy (or nickel-and-diming the premium), I would just buy the owner's policy but ask your closing attorney to discount his/her fees (as it is true that he/she will be paid a handsome commission on the title policy). This way you get the protection of the policy (for what it is worth) and the attorney gets the fat commission from the sale of the policy, but you can still save a little bit of money. Ideally you would negotiate this with the closing attorney when you hire them, not two days before closing.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Fri Apr 13, 2018 11:10 pm

Kickbacks are legal when they're called "commissions" and paid by the insurance company to the title agent.

The OP is paying $2300 for owner's title insurance. According to the article in Commonwealth Magazine, 65% to 85% of it is being paid to his lawyer as a commission.
Most states do not have attorneys closing transactions and acting as title agents. A title company offers title insurance. They may be the marketing agent and do the title search. They may also function as an escrow company. An insurance company with no client contact may underwrite the risk. This type of separation is common in the insurance industry. I think we paid about $800 for lenders title insurance on our home and the seller paid a similar amount for our owner’s title insurance.
Risk is not a guarantor of return.

Quantumfizz
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by Quantumfizz » Sat Apr 14, 2018 12:45 am

When I shopped online, I found that the title insurance I purchased was actually lower than online quotes and in line with the applicable government mandated rates for my state, which were based on the sale price of the property. Zero room for negotiation, unless you wanted to pay more to an online broker. The amortized cost over the life of ownership is next to nothing, and agree that most risk "modeling" done so far is far too simple. I would have a hard time not buying it, especially if something crazy were to happen.

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Sat Apr 14, 2018 11:47 am

jalbert wrote:
Fri Apr 13, 2018 11:10 pm
Most states do not have attorneys closing transactions and acting as title agents. A title company offers title insurance. They may be the marketing agent and do the title search. They may also function as an escrow company. An insurance company with no client contact may underwrite the risk. This type of separation is common in the insurance industry. I think we paid about $800 for lenders title insurance on our home and the seller paid a similar amount for our owner’s title insurance.
No matter who gets the kickback and who doesn't, it's still a kickback. The consumer is still paying 10 times what the title insurance should cost.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Sat Apr 14, 2018 12:18 pm

Reinsurance is a common paradigm. Some states regulate tithe insurance premium levels. You go to a title company, they charge the regulated premium, and they may insure it themselves or transfer the risk to another insurance company. In the latter case, they are acting as a title agent.
Risk is not a guarantor of return.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Sat Apr 14, 2018 12:28 pm

A land registry simply guarantees that all liens are in the database. If the land registry shows clear title, then the government guarantees your title. If a lien is later discovered, then the government will pay it off and sue the previous owner to recover.
This is nothing more than publicly administered title insurance. Done well, it may be better than privatized title insurance, but it isn’t free. It is surely funded by taxes and user fees. It may even provide the opportunity for people who don’t even own property to pay taxes that support title insurance.

Recovery of liens from previous owners is not likely a source of funds for the system. There is usually a reason the original liability was not paid and led to a property lien.
Risk is not a guarantor of return.

jalbert
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Sat Apr 14, 2018 12:38 pm

jalbert wrote:
Sat Apr 14, 2018 12:28 pm
A land registry simply guarantees that all liens are in the database. If the land registry shows clear title, then the government guarantees your title. If a lien is later discovered, then the government will pay it off and sue the previous owner to recover.
This is nothing more than publicly administered title insurance. Done well, it may be better than privatized title insurance, but it isn’t free. It is surely funded by taxes and user fees. It may even provide the opportunity for people who don’t even own property to pay taxes that support title insurance.

Recovery of liens from previous owners is not likely a source of funds for the system. There is usually a reason the original liability was not paid and led to a property lien.
I think the centralized title insurance being referred to as a land registry does solve one significant problem. If a property is purchased and sold again in 5 years, each purchase of title insurance covers the full history of the title. But if it is the same insurer, they only need a premium to cover new issues that occurred in the 5 years of new ownership— they already received a premium to cover prior issues.
Risk is not a guarantor of return.

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Sat Apr 14, 2018 1:02 pm

jalbert wrote:
Sat Apr 14, 2018 12:28 pm
This is nothing more than publicly administered title insurance. Done well, it may be better than privatized title insurance, but it isn’t free. It is surely funded by taxes and user fees. It may even provide the opportunity for people who don’t even own property to pay taxes that support title insurance.
It's not free, but it's nearly free. Keep in mind the loss ratio on title insurance is 5%.

When something is as inefficient as title insurance, it's hard to do worse.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Sat Apr 14, 2018 5:33 pm

Keep in mind the loss ratio on title insurance is 5%.
Nationwide or in Massachusetts?
Risk is not a guarantor of return.

OriginalJHH
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by OriginalJHH » Sat Apr 14, 2018 5:43 pm

I was a real estate attorney for a title company for 7 years.

FWIW, I would never buy a house without title insurance or a survey. I have seen too many things go wrong.

The price is too small compared to the purchase price. You can shop on price but generally speaking the price is set due to state insurance laws.

GuyInFL
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by GuyInFL » Sat Apr 14, 2018 5:56 pm

Have you tried shopping around for title insurance?

https://www.mtgprofessor.com/Ext/Partne ... rance.aspx

talzara
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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Sun Apr 15, 2018 11:11 am

jalbert wrote:
Sat Apr 14, 2018 5:33 pm
Keep in mind the loss ratio on title insurance is 5%.
Nationwide or in Massachusetts?
Massachusetts.

The countrywide loss ratio has also gone down to 5% recently, but it's usually 5-10%.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Sun Apr 15, 2018 1:54 pm

Nationwide, the loss ratio was 11.8% in 2011:

http://www.naic.org/cipr_newsletter_arc ... urance.htm

I imagine that would be aggregated from a higher loss ratio in states where title insurance is heavily regulated, and lower loss ratio in states where title insurance is less well regulated.
Risk is not a guarantor of return.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jalbert » Sun Apr 15, 2018 2:15 pm

Some interesting info:
https://en.m.wikipedia.org/wiki/Title_insurance wrote: Most of the industrialized world uses land registration systems for the transfer of land titles or interests in them. Under these systems, the government determines title ownership and encumbrances using its land registration; with only a few exceptions, the government's determination is conclusive. Governmental errors lead to monetary compensation to the person damaged by the error but that aggrieved party usually cannot recover the property. The Torrens title system is the basis for land registration systems in several common law countries. Nineteen jurisdictions in the United States, such as Minnesota and Massachusetts, adopted a form of this system between 1896 and 1917, however it fell out of favor after single judgement in Imperial County, CA, bankrupted the state's title indemnification fund, and the vast majority of U.S. states have opted for a system of document recording in which no governmental official makes any determination of who owns the title or whether the instruments transferring it are valid.
Risk is not a guarantor of return.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Sun Apr 15, 2018 5:03 pm

jalbert wrote:
Sun Apr 15, 2018 1:54 pm
Nationwide, the loss ratio was 11.8% in 2011:

http://www.naic.org/cipr_newsletter_arc ... urance.htm

I imagine that would be aggregated from a higher loss ratio in states where title insurance is heavily regulated, and lower loss ratio in states where title insurance is less well regulated.
Loss ratios were temporarily elevated in the aftermath of the subprime loan crisis.

Here's 10 years of financial statistics on title insurance (page 13): http://www.naic.org/documents/topic_ins ... report.pdf

Since 2012, the loss ratio has been back in the usual 5-10% range. In 2016, the loss + LAE ratio was a mere 4.9%.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by jfn111 » Sun Apr 15, 2018 5:48 pm

taguscove wrote:
Fri Apr 13, 2018 6:28 am
I feel compelled to provide a counterpoint to the pro title insurance posts.

Yes, sign the waiver it is standard.
Yes, we skipped the title insurance on our Cambridge, MA home purchase. I have few decisions in my life that I am more satisfied with. I saved nearly $4000 instead of paying the title insurance industry I absolutely loathe.

The major title insurance companies are publicly traded. Insurance payout rates are below 10%. Their business model operates on huge incentives to home closing attorneys and realtors. 40% of fees go into kickbacks, 10% general administrative, and 40% profit.

If you have the flexibility, stand against this borderline scam.
I know you all hate real estate agents around here but we have nothing to do with Title Insurance. We certainly don't get any kickbacks or compensation from our buyer's purchasing it.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by escape goat » Mon Apr 16, 2018 8:05 am

That’s why I just buy the insurance, but effectively at a discounted rate via negotiating closing attorney fees (such that the title premium effectively buys both insurance and a closing attorney).
taguscove wrote:
Mon Apr 16, 2018 6:55 am
If I paid $4000 for title insurance, $200 of it is used for insurance payouts. Sounds like a great deal!

Title insurance plays on the idea that you should pay for insurance where you can't afford the losses. That is the core premise of insurance. The problem is that the title industry has co-opted the regulatory bodies, creating legal barriers and an exceptionally high profit margin.
talzara wrote:
Sun Apr 15, 2018 5:03 pm
jalbert wrote:
Sun Apr 15, 2018 1:54 pm
Nationwide, the loss ratio was 11.8% in 2011:

http://www.naic.org/cipr_newsletter_arc ... urance.htm

I imagine that would be aggregated from a higher loss ratio in states where title insurance is heavily regulated, and lower loss ratio in states where title insurance is less well regulated.
Loss ratios were temporarily elevated in the aftermath of the subprime loan crisis.

Here's 10 years of financial statistics on title insurance (page 13): http://www.naic.org/documents/topic_ins ... report.pdf

Since 2012, the loss ratio has been back in the usual 5-10% range. In 2016, the loss + LAE ratio was a mere 4.9%.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Mon Apr 16, 2018 9:59 am

jfn111 wrote:
Sun Apr 15, 2018 5:48 pm
I know you all hate real estate agents around here but we have nothing to do with Title Insurance. We certainly don't get any kickbacks or compensation from our buyer's purchasing it.
In most states.

In states where real estate agents are allowed to do the closing, they also pocket the kickback from the title insurance company.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by talzara » Mon Apr 16, 2018 10:08 am

taguscove wrote:
Mon Apr 16, 2018 6:55 am
Title insurance plays on the idea that you should pay for insurance where you can't afford the losses. That is the core premise of insurance. The problem is that the title industry has co-opted the regulatory bodies, creating legal barriers and an exceptionally high profit margin.
The title insurance companies make very little profit. The NAIC statistics show a 10-year underwriting profit of just 2.2%. Excluding the subprime mortgage crisis, the underwriting profit is just 5.9%.

Most of the premium goes to paying kickbacks. The article about Massachusetts says that 65% to 85% of the premium is for commissions. The business model would be 5% loss + LAE, 5% profit margin, 5% expense ratio, and 85% kickbacks.

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Re: Owners Title Insurance - Super Heavy Handed Pitch

Post by Luke Duke » Mon Apr 16, 2018 2:35 pm

quantAndHold wrote:
Tue Apr 10, 2018 2:39 pm
They don’t tell you this, but you can shop around for a better deal on the policy.
In Texas the cost of title insurance is dictated by the state. Your policy would cost a lot more in Texas.
https://www.tdi.texas.gov/title/titlerates2013.html

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