[Scubabear68]

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.

[anonfordays]

>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.

[i_am_proteus]

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]

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]

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 £50 for insurance that literally does nothing....

[Geeek]

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]

Automated how exactly, when so many Counties in the US are not online?

[i_am_proteus]

What you say is true, but does not address the possibility of an open market for such local agents, rather than the buyer simply accepting the realtor's recommendation in the overwhelming majority of cases.