I refinanced my house last year and want to do it again? Is there any way to avoid paying title insurance again?
Well, you can ask, and you can probably bargain the price down, but I don’t think anyone will go for dropping it entirely.
See if the same title insurance company will cover you with an extension rider. It is so ridiculously easy for them to check all activity on your property in the last year with a push of a computer button, that they might not charge much. It’s entirely up to their good nature; they are entitled to charge you the full amount if they want.
You don’t need or want a new title policy. The mortgagee does. If it’s a new lender it will want a new title policy insuring the loan. The cost will be based on the amount of the loan, so you may not have much input into the price. But at least you won’t have to pay for an owner’s policy.
If you can provide your old title work, you will probably get a discount, but every loan, no matter how recently you refinanced, must be insured.
And, since Galen is the one requesting the loan, that would make him the mortgagee.
The mortgagor, which would be the lender, is the one requesting and requiring assurance that the property is properly titled. However, it is common that the mortagagee pays for the title insurance policy (or abstract).
Unless state law says otherwise, charges imposed by a lender are negotiable. Small-town banks often have flexibility in these matters, so it doesn’t hurt to ask.
You are correct in that no prudent lender will issue a loan without title insurance or an abstract[sup]*[/sup]. However, the old title work effectively expired the day after that loan was issued. It only insures the lender up to the time of the loan.
Anything might have happened to cloud the title since the original loan and today. That is why a new policy is needed.
In the days when abstracts were commonly used, creating an abstract was a time-consuming, labor-intensive task requiring a trip to the courthouse. But today, this information is commonly in title companies’ computers. They can look up a parcel in a few seconds and all pertinent data is available immediately without leaving the office.
- ABSTRACT: (Abstract of title), “A historical summary of all of the recorded instruments and proceedings that affect title of property.” (Dictionary of Real Estate Terms, Barron’s, Fourth Edition.
That’s not true. The one requesting the loan is making the mortgage. That makes her the mortgagor. The lender is the mortgagee. Please check your dictionary.
You are correct, barbitu8. I have it backwards.
However, my statement about title insurance stands. It looks like Galen is trying to get a loan and needs title insurance or a reasonable facsimile thereof, and he is probably going to be burdened with the expense, no matter how unreasonable it may sound.
Yes, but Galen, as I said, doesn’t need a new policy. Any defects since he or she acquired title would be due to him or her. The lender will require one, but the cost of a new owner’s policy is eliminated.
I don’t think in this day and age any lender will accept an abstract, at least without an attorney’s opinion. And even then, it is quite doubtful. I suppose in a few farm towns that remains a possibility.
Not necessarily. And this is exactly what the title policy (or an abstract) is designed to cover (or uncover).
I can file a lien on your property tomorrow. In my local courthouse, it costs $13. I don’t have to notify you to make it proper. I would, of course, open up myself to charges by you that it was a fraudulent claim, but the lien would show up on a title insurance enquiry and the lender would want to have it cleared up before risking his money.
And, yes, there was a thriving industry not long ago in Los Angeles doing exactly that – scam artists would seek out old people with paid-off mortages, file a lien, foreclose, and gain title from the addled owners. This has been reduced by L.A. sending out a notice of ANY filing to the property owner, asking for comment, but I know that practice is not followed USA-wide.
And it’s also possible that a lien is filed by mistake (wrong parcel number, whatever). No lender wants to take a chance.
Right, an abstract is an obsolete procedure in most (all?) of the USA; I was only using it as an example. Title insurance companies effectively have abstracts in their computers. After looking them over for red flags, if they find none, they usually issue a policy. And if they previously issued a policy at date xx/xx/xx, and nothing has been filed on that property since, it is a pretty good bet that the title is still clear.
Underneath the “insurance” concept lies an “abstract” concept.
If someone files a fraudulent lien, he or she is liable for clouding the title. This is a proper action in tort. Such a lien is not a real cloud, but an apparent cloud, and the owner has damages to the extent that the owner suffers damages. The owner knows if he or she has done something to cloud the title since he or she acquired the title, if it is a real cloud. No need for her to get another owner’s policy.
I think you missed ** barbitu8**'s point. The lender will need a new policy which Galen will have to pay for. Galen, however, will not need a new owner’s policy to insure Galen’s interest. I paid for two separate title insurance policies when I bought my house - one to insure the lender and another to insure me.
I never heard of TWO policies on one real estate purchase, but I guess you are covered for all possible situations! 
When you buy a house and have to get a mortgage, two policies are always issued: an owner’s policy and a mortgagee’s policy, the former to insure the new owner and the latter to insure the lender. If you are just refinancing, all you have to get is the policy for the lender. When you have to purchase both policies, the extra charge for the other policy is not all that much.
Might not be common everywhere.We do lots of things differently in NYC. In fact, I’ve heard that there are some parts of the US where there are not three attorneys at a closing (buyer’s, seller’s and bank’s).
In some states, California and Wisconsin, to name the only ones I know about, there are may be NO attorneys at a closing. In California, the property transfer paperwork is handled by an “Escrow” company; in Wis, by the title company. Both are supposed to be neutral to all parties; they just make sure everything that is agreed to and required by law is carried out. If there is any dispute, things come to a halt until resolved. Attorneys may be part of a transaction but it is not required.
I have bought & sold property in California just by writing out the contract myself, getting the other party to sign it, getting loan documents, then taking all the paperwork to an Escrow company to work out the details. Either party can pay the Escrow co. or the fee can be split. I found it very un-adversarial and cheaper than paying attorney’s fees.
Just to clarify my previous post, I didn’t mean to imply that attorneys were banned from a closing :rolleyes: as my phrasing might be misinterpreted. I just meant their presence was optional.
Attorneys are always optional. And as the saying goes, one who acts as his own atty, has a fool for an atty; especially if you are the buyer at the closing. Escrows don’t substitute for an atty. They are neutral and not looking after anyone’s interest.
It’s routine in New Mexico to close on property without any attorneys. You just turn up at the title company along with the buyer (or seller, depending on your end of the transaction) and, often, your real estate agent(s) and mortgage broker, and sign approximately 3 reams of paper.
When Mr. Legend and I bought our house, we had our real estate agent, the seller’s real estate agent (in lieu of the seller, who was in California), and our mortgage broker at the title company. Our broker had arranged everything and explained all the papers to us, but I’m not sure if that’s SOP or not, since he’s a friend of ours.