[HN Gopher] Working Title (Insurance)
___________________________________________________________________
Working Title (Insurance)
Author : Keegs
Score : 152 points
Date : 2024-07-01 16:00 UTC (1 days ago)
(HTM) web link (www.bitsaboutmoney.com)
(TXT) w3m dump (www.bitsaboutmoney.com)
| danielvf wrote:
| A surprising law foundation in the US is that if you live
| somewhere long enough as if you were the owner, then it becomes
| yours. Sometimes known as "squatters rights". This feels a bit
| unfair at first.
|
| However, this "if you think you own it, you probably do own it"
| has turned out fairly well. At least in most places in the US,
| unlike England, you don't have to trace all property transfers
| back to Norman Conquest in 1066 in order to know who owns land.
| Anyone who holds it long enough resets the baseline date at which
| you need to trace it back to.
| tptacek wrote:
| As a practical matter I think this mostly confuses adverse
| tenancy with adverse possession. The latter case, of squatters
| gaining full legal title to a piece of property, is
| extraordinarily rare, and as I understand it the cases all tend
| to be marginal (like: abutments of adjacent rural properties
| changing hands). Adverse tenancy is somewhat more common: you
| can establish through your actions an expectation that you're a
| legitimate tenant, and it can be legally obnoxious to remove a
| tenant.
|
| The cases Patrick describes in this piece aren't really about
| adverse possession, but rather about property sales where the
| seller (or the seller's seller, etc) doesn't have the full
| legal authority to sell in the first place, and the people who
| do show up later to contest the sale.
| kube-system wrote:
| Yes, I think what most people think of when they think of
| "squatters" in the US is a much different dispute over
| tenancy, not title. Most (all?) places in the US it is
| possible to be a legitimate tenant without any lease
| agreement, although I've found many people aren't aware of
| this. The term "squatter" is used for a broad spectrum of
| issues of tenancy, many of which aren't at all clear-cut. The
| current popular take on the issue might be that it's some
| kind of loophole or problem with the law which should be
| summarily handled, but the root of the issue is simply that
| cops aren't courts that can't perform complicated eviction
| proceedings, even if one party _claims_ that the issue is
| simple (because it might not be).
| lmm wrote:
| > The latter case, of squatters gaining full legal title to a
| piece of property, is extraordinarily rare, and as I
| understand it the cases all tend to be marginal (like:
| abutments of adjacent rural properties changing hands).
|
| The marginal cases are more common certainly, but the full
| version does happen. There's one that comes up on Reddit
| every so often of someone living in a home that had been
| abandoned in the 2008 crisis and presumably just written off
| by the legal owners (sounded like it had been owned via
| multiple levels of bankrupt property companies) for long
| enough that they claimed ownership, apparently successfully.
| tptacek wrote:
| The one I see on Reddit is "Texas guy buys $300,000 house
| for $16" (the registration fee), but he was evicted less
| than a year later. I'd love to see the case where someone
| succeeded in holding the house! I did go looking, but it's
| just yard fence after yard fence in the court cases.
| toast0 wrote:
| Adverse position cleans up title, because the conditions are
| basically live in it and fufill the obligations of an owner
| for X years, and you are the owner.
|
| So if many years later, someone comes out of the woodwork to
| claim a fradulent conveyance, it doesn't matter. You lived in
| it and paid taxes as if it was yours for 10 years (or
| whatever), so either it's yours by conveyance or yours by
| adverse possession, and it's too late to undo the transfer.
| aetherson wrote:
| I think that the case that Patrick describes leads straight
| into the intended case for adverse possession. You need to
| extend the timeline a litte.
|
| Okay, so Bob owns a house. Bob marries Jane in an ill-
| advised, quickly ignored ceremony, but never gets formally
| divorced. Bob sells his house (in a community property state)
| to Ted. Ted lives in the house for 20 years. Jane dies.
| Jane's son Rick goes through her stuff, realizes that she was
| still married to Bob, realizes that Jane had a legitimate
| claim on the house that Ted has been living in for 20 years.
|
| This is a classic adverse possession situation. Ted has been
| openly and notoriously living in this house, acting as owner.
| If Rick presses his claim, it is likely that Ted can win an
| adverse possession claim (assuming that Ted lives in a place
| where adverse possession still works the way it basically did
| in common law).
|
| I am not a lawyer, this is not legal advice.
| stackskipton wrote:
| I did gopher work for Title Insurance company one summer.
| This type of stuff is so common in certain areas. Another
| common one we saw similar to "X party has claim no one
| realized" was "Property was passed down generation from
| generation and now someone wants to sell it and lack of
| clear title emerges because property is still in long dead
| grandparents name."
| jstanley wrote:
| > unlike England
|
| We have the same thing in England though.
| Animats wrote:
| No, England has a new system, as of 2002. Property ownership
| records have been centralized, under "HM Land Registry", which
| has more authority than it used to have. Those records are now
| treated as definitive. If a fraudster can get a record changed
| in HM Land Registry, _they own the property_. The fraudster can
| only be sued for damages.[1] The fraudster has probably sold
| the property to an innocent party. That innocent party now has
| good title to the property, and the original owner is out.
| People have gone on vacation and had their houses stolen.
|
| [1] https://www.getagent.co.uk/blog/properties/house-sold-
| withou...
| anamexis wrote:
| That article only gives an example of someone who recovered
| their property after it was fraudulently transferred.
| codingdave wrote:
| Yes, but keep in mind that "as if you were the owner" in at
| least some jurisdictions means that you were maintaining and
| improving the property and paying the property taxes. And we're
| talking about many years, not just squatting on a vacant
| property for a few months.
| xboxnolifes wrote:
| Adverse possession becomes a lot more of an obvious outcome
| when one stops thinking about urban areas and well put together
| homes, and instead starts thinking about abandoned areas and
| properties with unknown owners. At the end of the day, towns
| want to collect property taxes and would rather have someone
| improving a property and paying taxes on it than a slowly
| degrading property that has clearly been forgotten about,
| considering the owner didn't notice the adverse tenant for
| decades. Or maybe nobody could manage to contact the owner for
| decades. Or maybe the named owner for a plot of land was lost
| to time. What is the other option, leave it untouched for
| decades and centuries because at some point in the past someone
| had their name on it?
| klipt wrote:
| This seems like a problem that's automatically solved by land
| tax. If the property is abandoned, the tax goes unpaid and
| the state auctions the property off to cover the unpaid tax.
| Voila, new owner of record.
| Kalium wrote:
| That works to the extent that a polity is willing and able
| to seize, care for, and sell off parcels. At scale, this is
| not guaranteed to be as easy as it sounds. Case in point:
| Detroit.
| Horffupolde wrote:
| Utis posidetis is already present in Roman law.
| pjc50 wrote:
| England has full title gainable through squatting, but it's
| also been criminalized under most circumstances. These co-exist
| oddly.
|
| https://england.shelter.org.uk/professional_resources/legal/...
|
| (I'm glad you said "England", because the Scottish system is
| different, and the Register of Sasines
| https://www.ros.gov.uk/our-registers/general-register-of-sas...
| got replaced with a modern database round about the millenium)
| PaulDavisThe1st wrote:
| When I applied for a development permit for my PV arrays, I had
| to do something very similar to the core of a title search. I
| headed on down to the county records department, and had to
| track down each sale (in reverse order), which are recorded in
| big paper books with handwritten entries, sorted by the first
| letter of the seller's family name then by date.
|
| However, since this is New Mexico, and even the idea of formal
| record keeping here is, _cough_ , rather recent, I only had to
| go back to _1980_ for the purposes of the permit
|
| :)
| Terr_ wrote:
| > [Generally the US local authority] does not record ownership
| but rather records certain private transactions. Current
| ownership is not an independent fact; current ownership is the
| sum of all compounding transactions since time not-quite-
| immemorial.
|
| Event Sourcing with no snapshots.
| ipython wrote:
| I always thought of title insurance as a complete farce. However,
| I did end up with a scenario where title insurance paid out (to
| me) to the tune of several thousand dollars when I was sued by a
| neighbor.
|
| The neighbor accused me of infringing on her property. I, in
| turn, proved (enough to the title insurance company, anyway) that
| the neighbor had also infringed on my property, and had done so
| in an invisible way (underground) since before I purchased the
| property. Since that infringement was not disclosed to me when I
| closed on the property, the title insurance company agreed to
| compensate me for that infringement to save the expenses of
| litigation.
|
| At the end of the day, I ended up net positive to my own pocket
| as a result of their litigation. Unfortunately, a lot of lawyers
| made a lot of money in the process and everything (insurance,
| etc) ends up being more expensive as a result of crap like this.
| pavel_lishin wrote:
| Can you say more about the presumably secret tunnel your
| neighbor dug under your house?
| ipython wrote:
| Not a tunnel, an invisible fence line.
| lokar wrote:
| Title insurance also covers (sometimes long standing) errors in
| the survey of the property boundary. This can be somewhat
| expensive to say, move your driveway off someone else's property.
| HeyLaughingBoy wrote:
| My real introduction to Title Insurance came not when I purchased
| my first house, but as I sold it. The buyer was an experienced
| builder who was buying the house (in a fairly desirable area of
| the city where property was appreciating quickly) in order to add
| upgrades and flip it.
|
| When his agent asked why he had crossed out the line for title
| insurance, he retorted, "that property's been sold three times in
| 10 years. The title's clean."
|
| I guess there was still some residual risk, but he had a point.
| BillSaysThis wrote:
| He also was probably not financing the purchase with a
| mortgage.
| thuuuomas wrote:
| I'm very curious to know how many flippers are on the books
| with FHA. Definitely a nonzero amount. Who's really checking
| up on owner occupancy? Like 4 overworked feds in DC?
| zdragnar wrote:
| FHA loans can't be used for investment properties. You must
| move in within 60 days and retain residence for one year.
|
| The only exception that I know of is if you buy and move
| into a multi-unit building and occupy one of the units
| yourself.
|
| If you obtain an FHA loan, you are attesting an intention
| to comply with these requirements. Going into the loan with
| the intention of selling quickly (not occupying and or
| flipping in less than a year) exposes you to charges of
| fraud.
| adolph wrote:
| If you are knowledgeable enough about the risk that's great.
| For an average person buying a house things can and do go
| sideways:
|
| https://www.houstonchronicle.com/politics/houston/article/ho...
| kelnos wrote:
| The question is also who will be left holding the bag. If title
| searches over the past 10 years have turned up nothing
| problematic, then likely when the flipper sells, their buyer's
| title search won't turn up anything either.
|
| And once their eventual buyer buys the house, it's their
| problem (not the flipper's) -- well, their title insurer's
| problem -- if a title dispute comes up later.
|
| And given that the flipper's goal is to hold the house for a
| relatively short time and make a profit on the improvements, a
| thousand or few saved on the title insurance could actually be
| a material amount of that profit.
| Scubabear68 wrote:
| The flipper will be left holding the bag. The 10 years of
| prior searches won't help you if the last owner snubbed a
| contractor and had a lien slapped on the house. Or a number
| of other scenarios.
|
| The title company won't issue the insurance if it finds
| issues like this. It will issue a list of items to clear
| before they will issue the insurance. It is generally up to
| the owner (eg the flipper) to cure the issues.
| aetherson wrote:
| Insurance has negative expected value in return for risk
| pooling.
|
| If something has a high level of importance in your
| finances or for other reasons, it makes sense to buy
| insurance. If you can handle the risk yourself (typically
| because the investment is not a terribly large amount of
| your total investments, and you do not think risk for this
| investment is correlated with risk to your other
| investments), then it doesn't make sense to buy insurance.
|
| House flippers could be anything from very small one-person
| operations who would be wiped out if they had to clear a
| lien, to fairly large operations who can absorb the
| occasional risk into their costs of doing business.
| treis wrote:
| That's fundamentally why title insurance doesn't pay out
| much. They exclude most defects that aren't discoverable
| and it's easy for everyone to find the defects that are.
| They are providing little actual protection hence why they
| pay out so little of premiums as claims.
| gwern wrote:
| That's an interesting argument. My intuition would've been the
| opposite: the title is much more likely to be dirty. 3 quick
| transactions in under a decade (and a fourth ongoing) means
| that many more opportunities for problems. Each transaction is
| a new opportunity involving a whole new set of people to be
| engaged in fraudulent conveyance or have a spouse pop out of
| the woodwork (as mentioned in OP).
|
| Maybe he figured that the _real_ safety comes from there being
| so many other people to sue given all the transactions...?
| rtpg wrote:
| Patrick's point about off-record transactions feels important
| here. Each on-record transaction leads to an opportunity for
| off-record transactions to be discovered! On-record ones are
| likely clean in some sense, whereas 10 years of no real
| estate on-record transations means nobody has looked.
|
| But to your point... the more people involved, the more
| moving parts involved.
| Terr_ wrote:
| > Each on-record transaction leads to an opportunity for
| off-record transactions to be discovered
|
| On the other hand, I would expect both types to correlate
| with one-another, tied together by a shared factor of
| "activity level."
| toomuchtodo wrote:
| I do not buy title insurance on investment properties if the
| last owner had a mortgage. If the title commitment was good
| enough for the bank, it's good enough for me. I build the
| potential clouded or impaired title into my risk model.
|
| (I've also filed public comments with the CFPB on title
| insurance being junk fees [1], full disclosure)
|
| [1] https://news.ycombinator.com/item?id=40524304
| Scubabear68 wrote:
| What if the latest owner has a contractor's lien on the house
| for an unpaid bill?
|
| Or if they are beyond on their property taxes? Or going
| through a messy divorce? Or get an unexpected large medical
| bill that finalizes as a financial judgement against them?
|
| Clean title from other owners tells you only a limited story.
| The current owners can completely trash the title but still
| have an existing mortgage.
| toomuchtodo wrote:
| > I build the potential clouded or impaired title into my
| risk model.
|
| This is built into my acquisition price. Across hundreds of
| transactions, I have yet to experience a loss. I'm
| effectively self insuring against the risk, vs the cost I
| would've paid for title insurance (which would work out to
| tens of thousands of dollars in aggregate).
|
| Property tax payment status, divorce cases, mortgages, and
| mechanics liens are all public record and can be searched
| for as part of researching a property. If the claim is
| public, I can settle it as part of the transaction on the
| settlement sheet with the settlement agent (who will
| disburse funds accordingly and handle recording/releases in
| concert with my real estate attorney). Unrecorded potential
| claims against the property are very rare in my experience.
| That isn't to say it can't happen, but only that if it
| does, I'm likely still coming out ahead over the long term.
| SkyPuncher wrote:
| The tax stuff is all public record - easily verifiable.
| Deaths are also generally publicly verifiable.
|
| The rest of the stuff would essentially require intentional
| fraud by the seller. You'd be able to recoup most of those
| costs via court. Annoying for a private individual, but I
| tolerable as part of a portfolio.
|
| I'll be real, you can pretty quickly tell the type of
| person you're dealing with in a home sale. The people who
| have a tendency to "trash their title" also show other
| signs of untrustworthiness during the transaction.
| Scubabear68 wrote:
| "Public record". Yes.
|
| Now tell me how you find the public record. When much of
| it is not on the internet?
| SkyPuncher wrote:
| Most municipalities now have online records as part of
| their recording keeping system. This includes all of the
| tax information about a property. Might even include
| records of various permits.
|
| If they're not online, then they should have records in
| the municipal or county office. Might be a small fee to
| pull them, but they'll have them.
|
| If they don't have records, then you may want title
| insurance.
| Scubabear68 wrote:
| "Most"? Citation please.
|
| I reality the dozens of Counties and hundreds of
| municipalities in just NJ are all different. Some online.
| Some not. Some online but with enormous time lag.
| Differing systems with different data. My township and a
| few dozen others were all coveted by a tax assessor who
| had an abomination of a Flash based web site that
| degraded to the devil's own JavaScript when Flash not
| available.
|
| Then you need to know the County system. And state
| system.
|
| Then get into the courts. Court eFiling and search
| capabilities vary wildly.
|
| In my town's case you would need to do several on-site
| searches plus a few Internet based ones to do a proper
| title search.
| anonfordays wrote:
| >What if the latest owner has a contractor's lien on the
| house for an unpaid bill?
|
| Not covered by title insurance.
|
| >Or if they are beyond on their property taxes?
|
| Specifically not covered by title insurance.
|
| >Or going through a messy divorce?
|
| Not covered by title insurance, nor would this scenario
| matter since the owners are known.
|
| >Or get an unexpected large medical bill that finalizes as
| a financial judgement against them?
|
| Not covered by title insurance.
|
| Hope I cleared that up. Title insurance is a legalized scam
| with a market cap in the billions.
| Scubabear68 wrote:
| None of what you state is accurate. What the title
| -search- will do is show you all of these cases which
| need to be cleared before insurance is issued.
|
| Title insurance is not about the insurance, it's about
| the scan.
| xivzgrev wrote:
| What does he care? He's flipping it. In the off chance there's
| an actual title issue it's unlikely to occur during the short
| time he's holding
| NoboruWataya wrote:
| His buyer will also check the title before buying, so the
| point is that if there is an issue with title he won't be
| able to flip it.
| alright2565 wrote:
| The opposite might be true actually--in my state, squatter's
| rights apply once a person has believed they hold the title for
| 7.5 years (20 years if they don't hold a title)
|
| So it would be better from this perspective to not have much
| buying & selling, as long as the most recent owner is
| trustworthy & has used the property for the past 7.5 years.
| TacticalCoder wrote:
| > The rest is a mix of government fee passthroughs and Obvious
| Nonsense, such as a $125 "water processing fee," $55 for a wire
| transfer where that number is just made up, etc. But if I were to
| go through each of the 16 line items summing up to $1,400, we'd
| be here all day.
|
| 1400 EUR here in notary and government racket to change the
| number of shares in the company. Two paragraphs containing ultra
| basic math wrapped in legalese.
|
| These 16 lines seems like they got a lot for $1400 compared to
| me. There's still way to go: the government rackets better and if
| they want to really sucker money in, they have to learn from the
| best!
| paulgerhardt wrote:
| I recently performed a title search on a property going back to
| the 1820's - the land was issued to the original owner by James
| Monroe and the buck stopped there.
|
| An acquaintance performed a title search on another property
| going back to the 1100's. They found a serious black and white
| error circa 1225 which voided the entire chain of claim. They did
| not report the error.
| cynusx wrote:
| The US has squatting laws, if you are living (uncontested) in a
| property for a determined period you can claim title.
|
| There are always gaps in emerging economies and this rule is
| one of the more useful ones to onboard assets into the legal
| system.
|
| cfr. De Soto - Mystery of Capital
| User23 wrote:
| Every state has their own laws. Interestingly some states
| advantage squatting with a colorable claim of title. For
| example if your uncle John leaves you real property in his
| will that he doesn't have title to and you notoriously occupy
| and use that property for seven years you can apply for a
| clean title. Without that colorable claim you might need
| twenty years or more.
| zinekeller wrote:
| > An acquaintance performed a title search on another property
| going back to the 1100's. They found a serious black and white
| error circa 1225 which voided the entire chain of claim. They
| did not report the error.
|
| If this is the UK and the land-in-question is registered in the
| records held by the HM Land Registry, the black-and-white error
| is already void only recently-ish (Land Registration Act 2002
| gave a 10-year "last chance" claims for very old deed errors,
| and the error you mentioned is now extinguished). Even if if
| was reported by your chap, HM Land Registry will just shrug
| because it literally has no legal effect now.
| chris_armstrong wrote:
| This whole situation is absolutely bizarre to me as an
| Australian. Our states converted to a system of centrally
| registered title (also known as Torrens title) over a hundred
| years ago to avoid the "old system" problem of tracing ownership
| records backwards in time. Although the system is still in effect
| for some properties, in many cases they've been converted anyway.
| djfergus wrote:
| And yet my conveyancer (WA) last year still tried to hock me
| some expensive additional title insurance. My line to her was
| "this sounds like it's protecting me from you not doing your
| job". I don't recall the response but it was unconvincing.
| chris_armstrong wrote:
| You'd think conveyancing would be cheaper here, but you're
| still spending $2-3k on who knows what to transact property.
| At least the process is quick and final compared to the mess
| in other common law jurisdictions
| sjy wrote:
| That's partly because the dominant platform for electronic
| conveyancing, PEXA, has a monopoly. Only licensed
| professionals who pay subscription fees can access PEXA.
| This removes competitive pressure on conveyancing fees
| because self-represented buyers must use a slower, riskier,
| non-standard paper process.
|
| https://www.afr.com/companies/financial-services/nsw-
| product...
|
| https://www.productivity.nsw.gov.au/market-study-on-
| econveya...
| w10-1 wrote:
| I recall enterprising lawyers researched California coastal
| property titles back to the 19th century to overcome more recent
| prohibitions on subdivision -- successfully! Does anyone remember
| their names or details?
| hakfoo wrote:
| I have to wonder why we haven't moved towards the Japanese
| example in the article, where the government provides a single-
| source of truth for title ownership.
|
| The low-value, high-margin industry disappears, and presumably
| there are mechanisms built into the state to resolve problems.
|
| I suspect it comes from a very similar logic to "why aren't wills
| centrally filed instead of random notaries and dueling
| documents?"
| roenxi wrote:
| The US approach is probably better. People have a very strong
| urge to centralise all power and knowledge in one centralised
| body but that is bad strategy. (1) Powerful centralised bodies
| usually end in disaster. If they get strong enough, they revert
| to groupthink and start breaking things. (2) Governments don't
| have enough bandwidth to deal with all this stuff. If the
| government is handling 10 critical services badly, voters can
| only reliably vote on 1 per election and it is a struggle to
| work out what the priority is. And (3) the office doesn't force
| reality to be simple, it just bulldozers over inherent
| complexity in the real world.
|
| Pushing as much of the process as possible into the courts and
| private sphere is better strategy than having a blessed
| database. It gives people more opportunities to sort things out
| quickly and in parallel with other issues.
| robocat wrote:
| The proper US answer shouldn't be federal centralisation, but
| centralsation per state. That should avoid to worst
| centralisation issues and have clear benefits. And it clearly
| works in other countries that are smaller or bigger than
| individual states: it works in New Zealand (similar to
| Oregon) and Australia (about 30 million people, though I
| don't know if their registry is federally centralised) for
| example.
| tichiian wrote:
| Land registry in Germany is per city/town/municipality.
| Since land doesn't really move, it is always registered in
| the municipality where it is located. All titles,
| mortgages, owners and weirdnesses (local shepherd having
| the right to graze his sheep on your land) are registered
| locally. Downside is that e.g. taking a mortgage on your
| house incurs the additional cost of recording the mortgage
| in the land registry and removing the record after the
| mortgage is paid.
| robocat wrote:
| > The low-value, high-margin industry disappears
|
| We have a registry in New Zealand: we don't need title
| insurance (I haven't heard of it but presume it is available).
| Unfortunately there are still plenty of other silly costs that
| remain: the lawyer conveyancing is still approx $1000, you must
| purchase a LIM in your own name if you wish to be able to
| contest certain failures of your local government, mortgages
| require property insurance, property insurers require a variety
| of expensive work (often pointless shit), you can't get the
| government cover except indirectly via property insurance, ...
| Fortunately we mostly don't use sellers agents but vendors
| agents still take 2 or 3 percent and agents require
| certification so it has aspects like a monopoly with little
| competitive pressure.
|
| And the registry can be interrogated so privacy is a problem.
| Mortgage information also shows in credit reports so there's
| even less privacy with that sensitive information.
| dudus wrote:
| The more I learn about real estate the less inclined I am in
| participating. I'll probably rent for the rest of my life.
| zdragnar wrote:
| I would say you're missing out, but it really depends on the
| things you value in life.
|
| That said, I've known people who regretted buying a particular
| piece of property, but I don't think I know anyone who regrets
| not having a landlord anymore.
| Scubabear68 wrote:
| I disagree with the author a bit here.
|
| You are paying for title insurance mostly to buy the expertise of
| a local title agent who knows how to look up things locally.
|
| There is no national database that is up to date and trustworthy
| for this. To be even close to accurate, you need to check the
| source of truth for property deeds, transactions, liens.
|
| You need to check various level of governments if taxes are up to
| date. If they are not, there may be an implied lien.
|
| You need to check for financial judgements against the seller,
| which again may form an implied lien.
|
| Divorces and similar issues mentioned in the article.
|
| I am involved in an in-laws estate where a mom died without a
| will, a daughter was living in the house for free, and she and
| her husband had substantial judgements against them (hundreds of
| thousands of dollars). Resolution has involved the horrors of the
| surrogate's court, multiple real estate lawyers, bankruptcy of
| the daughter, financial negotiations with her creditors and
| bankruptcy manager, surrogate administrator bonds, and repeated
| discussions with a bank holding a second mortgage against the
| property.
|
| This has been ongoing for six years and is finally now almost
| resolved.
|
| Most transactions will not have any of these problems. But you
| get title insurance - or run the check locally yourself, at least
| - because you have no idea who the seller really is and what they
| may have gotten into.
| i_am_proteus wrote:
| The nature of the scam is not from title insurance being
| unnecessary, but title insurance not being purchased on an open
| market like other insurance products. It's added in to the
| contract, with financial benefit to the real estate agent, and
| not discussed.
|
| The author's point about real estate being one-shot for the
| buyer and seller is spot-on.
| Scubabear68 wrote:
| I disagree. Title insurance requires highly localized
| specialty agents from the municipality up to the county to
| the State to Federal.
|
| The rules in Hunterdon County, NJ are completely different
| from Detroit, MI and are different from Ossining, NY.
|
| If you paid a guy in CA to run a title search in Hunterdon
| County, you'd be in a world of hurt. Because most of our
| records are at various Hall of Records. Even when
| computerized they are not on the Internet.
|
| Even big places like Suffolk County, NY require a physical
| trip.
|
| This is why the title agent gets nearly all the money. It is
| much more about the search than the actual insurance. As the
| author indicates, it is very rare for anyone to have to pay
| on a title insurance claim.
| michaelt wrote:
| In the UK, title insurance used to be common because it was
| difficult to prove nobody had some 300 year old claim that
| was valid, but not recorded anywhere.
|
| The government passed a law giving anyone with such a claim
| 10 years to record it in the title registry, and after the
| deadline any unregistered claims were extinguished. And the
| title registry is digital and (basically) authoritative.
|
| Of course, that doesn't stop the people doing house sales
| paperwork from trying to charge you PS50 for insurance that
| literally does nothing....
| Geeek wrote:
| As someone's who is pretty enmeshed in the RE industry, I
| never heard of title searches being done locally or by a
| local agent. 90% of it is automated by the 3 big
| underwriters and the rest, should something specific come
| up, gets dealt with by some low rank title co employee.
| Scubabear68 wrote:
| Automated how exactly, when so many Counties in the US
| are not online?
| anonfordays wrote:
| >You are paying for title insurance mostly to buy the expertise
| of a local title agent who knows how to look up things locally.
|
| No longer true. Almost all title shops subcontract this out to
| small software companies that scrape public records and return
| an "all good" if nothing shows up. This query is usually done
| by a teenager or early twenty-something in a call center with
| zero experience, just data entry.
|
| >There is no national database that is up to date and
| trustworthy for this. To be even close to accurate, you need to
| check the source of truth for property deeds, transactions,
| liens.
|
| Sure there are, they're just private. Think LexisNexis.
|
| >You need to check various level of governments if taxes are up
| to date. If they are not, there may be an implied lien.
|
| Tax liens are not covered by title insurance.
| pjc50 wrote:
| > Many people, when they learn about land trusts, immediately
| assume that something extremely hinky is going on. Not so much;
| this is an extremely common way for savvy people to own property.
| It is in no way a loophole.
|
| I'm inclined to disagree with this. One of those "not everyone
| doing it is up to no good, but everyone who is up to no good is
| definitely doing it" things. Obscuring ownership makes it a lot
| easier to evade the state in other matters.
|
| The UK (and EU countries etc) has a register of "beneficial
| ownership" which attempts to untangle all such legal obfuscation
| efforts. https://www.ocorian.com/insights/understanding-uk-
| beneficial...
| graemep wrote:
| The UK register of beneficial ownership referred to in the
| article applies to registered companies AFAIK.
|
| You cannot get much information on land ownership from public
| registers in the UK other than the name and address of the
| owner, and the name and address of any mortgage holder so the
| problem this solves does not exist in the UK either. There is a
| requirement that overseas entities owning UK property register
| their ownership, but that is all I know of.
| eadmund wrote:
| > One of those "not everyone doing it is up to no good, but
| everyone who is up to no good is definitely doing it" things
|
| That applies to breathing, eating, sleeping: not everyone who
| breathes is up to no good, but everyone who is up to no good is
| _definitely_ breathing!
| sdwr wrote:
| You really can't trust those dirty breathers. Always moving
| air through their nose and/or mouth
| gumby wrote:
| The last time I bought a house (this was in California) I read
| the title insurance policy (as the author says, it's short).
| Turns out it protects my claim _in perpetuity_ meaning that when
| I sell the property I am still covered against any claims later
| brought by the buyer or their insurance company.
|
| Obviously therefore I don't need the insurance: in the very
| unlikely case title might be challenged I can always just sue the
| policy of the (now deceased) people who sold the house to _me_.
|
| The title company of course did not like this. More importantly:
| they were the one conveying the title (a lawyer doesn't do this
| as happens in some other states). They said "we earn our money on
| this and if you don't buy the insurance we won't convey the
| title" (i.e. complete the change of ownership). And at least
| around here in Palo Alto _only_ the title insurance companies
| handle this, at least according to my real estate attorney.
|
| So basically I was required to pay an extra few hundred bucks for
| nothing. A true "junk fee".
| ensignavenger wrote:
| I guess they could have just charged you a fee for conveying
| the title equal to what they would have earned on the insurance
| premium, did you ask them yhem to do that?
|
| It is pretty silly if CA requires a title company to do that. I
| have transferred titles in my state myself, here, I just take
| the title to the county and pay a small fee to have it
| recorded.
| formerly_proven wrote:
| > So basically I was required to pay an extra few hundred bucks
| for nothing. A true "junk fee".
|
| Over here it's 2% plus 5% transfer tax plus generally 3.5% for
| the realtor (matched by the seller).
| RecycledEle wrote:
| The Statute of Limitations might make "in perpetuity" mean a
| few years.
|
| I doubt you could sue the previous owner's insurance policy.
| throw0101b wrote:
| > _Obviously therefore I don 't need the insurance: in the very
| unlikely case title might be challenged I can always just sue
| the policy of the (now deceased) people who sold the house to
| me._
|
| Title insurance, at least in Canada, also protects against
| _future actions_ , and not just past ones:
|
| * If someone manages to do some shenanigans and convinces
| someone that they own your property, and gets a second
| mortgage/HELOC on it, and then not pay it back, which causes
| the mortgage/HELOC company to put a lien on it, title insurance
| protects against that.
|
| * If someone manages to sell your house to a person who then
| shows up at your front door on the "closing day", expecting to
| get inside, title insurance protects against that.
|
| The above can happen even though you own things properly, and
| got them properly from the previous owners.
|
| Occurrences in Canada:
|
| * https://www.cbc.ca/news/canada/toronto/prevent-title-
| insuran...
|
| * https://www.mannlawyers.com/resources/a-review-of-title-
| insu...
| hammock wrote:
| As someone who is in the process of buying a house right now..
| can someone give the TLDR of what I can actually do? Refuse the
| title insurance? Also the bit about land trust.. does this impact
| my ability to be underwritten for a mortgage?
| dpifke wrote:
| I regret paying extra for buyer's title insurance on my home. (In
| my state, this is separate from the lender's title insurance
| policy.) I got sued a week after closing by someone with a
| meritless claim against the sellers, whose lawyer admitted they
| only added me to the suit "to put pressure on <sellers> to
| settle." I paid over $10k in legal fees and got $0 back from the
| insurance policy. (The claims against me were dismissed on
| summary judgment as a matter of law, and the sellers eventually
| won at trial, and later again on appeal, on the remaining
| claims.)
|
| Just as frustrating, the title company knew about the claim
| before closing but didn't see fit to tell me. (They asked the
| seller to indemnify _the title company_ --not me--from potential
| lawsuits, but the seller refused. The sale closed anyways, with
| none of this drama on my radar until well into the proceeding
| lawsuit.)
|
| The reason the policy was worthless was that it had a _very_
| narrow definition of what constituted a title defect, and it
| would have involved another expensive, uncertain battle in court
| to try to establish that the lawsuit against me should have been
| covered. It was better to just eat my legal fees and treat them
| as part of the purchase price of the house.
| ensignavenger wrote:
| You paid ten grand in legal fees for a suit that was summarily
| dismissed? Sounds like not only were you fleeced by the title
| insurance co, you were fleeced by your attourney too! Maybe
| there is some reasonable explanation for the high fee, but I am
| having trouble thinking of what it might be.
| dpifke wrote:
| Lawyers' time isn't free, and even if you're in the right, it
| still takes time and money to get a judge to agree with you.
| South Dakota is like most states, where the expectation is
| that each of the parties to a lawsuit is responsible for
| their own costs and fees, regardless of who wins.
|
| "Fun" coda to this story was that about 9 months into the
| lawsuit, the Plaintiff and his family got hit with an
| unrelated Federal Civil Rights lawsuit. They own a hotel a
| few miles from my house, and instituted a blanket ban on
| Native Americans on the premises, because--in their
| words--"you can't tell the good Indians from the bad
| Indians." They put this policy (and their rationale behind
| it) in writing, if that gives you a hint as to the sort of
| legal masterminds we were up against.
| csours wrote:
| Bureaucracy is, among other things, Someone Else's Moat.
|
| As in, Title Search and Title Insurance could be treated as a
| Public Good and administered by a government entity (shock,
| horror!).
|
| But people are making a lot of money off of it, so there is a
| bureaucratic moat.
| travoc wrote:
| One of the reasons the title insurance market exists is because
| governments can't even reliably record title events in a timely
| manner. Putting them in charge of risk management would only
| make it worse.
| xyst wrote:
| Title insurance is pure profit in some states. In Texas, the
| state sets the premiums and this is dependent on the home sale
| price [1].
|
| In TX, for every $1 collected by title insurance companies, the
| insurance companies paid out roughly 1-2 cents. 98-99% profit.
| [2]
|
| I have honestly contemplated setting up my own title insurance
| company, advertise low rate title insurance but under the table
| give the buyer or seller half of the premium back to them.
|
| [1] https://tdi.texas.gov/title/Titlerates2019.html
|
| [2] https://www.texasobserver.org/entitled-to-profit-in-texas-
| ti...
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