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Don't Want Title Insurance
The documents we got after we applied for our home loan show a hefty fee for title insurance. We don't want title insurance. I'm not sure we even understand the point of it. Do we have to get it? |
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 First of all, before you say you don't want it, look to see who's supposed to pay for it. Under some contracts, the seller pays all or half of some expenses, and the title insurance may be one of those.
In terms of what title insurance is, it is a very specialized policy of insurance that is designed to insure that the seller has good title to the property that he/she can pass to you, and that there are no undiscovered liens or title defects that will interfere with your ownership of the property. It helps you be sure you are getting what you are paying for.
The lender will almost certainly require either title insurance or a lawyer's title opinion. Insurance for the lender insures the lender's interest. If you think about it, the lender has much more at stake in the beginning than you do. You're putting 5%, 10% or 20% down -- the lender is providing the rest of the funds for the purchase, so it's understandable that the lender would want to make sure that you have good title to the property so that the mortgage you give the lender will be valid and enforceable and not subject to a bunch of surprise liens.
As for whether you have to get title insurance for yourself, unless there's some state law that would require it, the choice is probably up to you. It is for your protection, however, and the amount you spend on it now won't seem like much if there are later lawsuits about true ownership of the property or the validity of any pre-existing liens.
Published on BankingQuestions.com 7/28/06
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