Buying house from a relative, do I need title insurance?

Factual Questions
1

My wife and I are buying a house from my father-in-law. He purchased the house about 17 years ago from the original owner. The title search when he bought the house and the title search we recently conducted did not turn up any liens against the property. Should my wife and I purchase title insurance, or are we reasonably safe in this case?

2

  1. This is clearly a lawyer type question. One would be remiss in not saying you should probably check with one (and have one do or review the paperwork - you pay, so (s)he’s working for you).

  2. I’d probably purchase it, in case there was a problem with the original title, or division from whatever master plot the land was originally cleaved from. IIRC when I purchased my home 9 years ago, it wasn’t all that expensive.

I’m sure someone with far more knowledge will be along soon enough.

3

If you are obtaining a mortgage to purchase the home, you will, almost certainly, be required to purchase title insurance (the mortgage company doesn’t want to take the chance that you really don’t own the property that is securing their loan).

If you are purchasing the home with cash, it’s up to you. You would probably be ok with a standard title check, but you never know what happened in the past that may have gone unnoticed…

4

I’d never consider passing on it. Its cheap and it covers your ass.

5

The answer is really the same as for any type of insurance. “I’m 30 and not likely to die in the next 10 years. Do I need life insurance?” “I’m not planning on crashing into anyone soon, and have only a 25% of it in the future. do I need auto insurance?” “Less than 1% of houses burn down every year. Do I need homeowners insurance?”

In every case, insurance covers an event that is more likely to not happen… but the potential costs of it happening are so significant that people choose to spread that cost out among all insured people.

6

I actually agree with others that for the cost, it’s probably worth it.

That being said, I’ve dealt with a LOT of title policies and only ever once heard of a title company paying out. In fact, when it discussions began, the people at the local office had no idea how to handle it because they’d never seen it happen.