What to do if the Title company don't want to insure the house

Question

Hello everyone, I'm in the process of buying a duplex, I think I got a pretty good deal on it, but the title company didn't want to insure the house because it has a fraude and that is showing that it has two owner or something like that.. but the lady that is selling me the duplex show me all the paper work, sing by the lawyers and a title company that they won the case of that fraude, and event the agent from the bank knows about it. Because he himself told me it was public info, so he knows everything got straight, but he told me to go look for something else another house to buy, that it was going to be complicated can someone guide me or explain how this works or what can do or I should let it go?

Charlie MacPherson · Answer

@Sergio Zapata If the title company won't insure it, that means that they think there's too much risk.

Sure, the seller can show you all kinds of paperwork - presuming that it's even genuine.  The agent from the bank says that "everything got straight".

All that sounds good if you say it fast, but if there's really evidence of fraud, neither the seller nor the bank's agent are going to help you when the other owner shows up in court wanting their house back.

A little insight:

The best form of title is one that is marketable.  That means that the title examiner has total confidence that the chain of title is completely clean.

Then there's insurable title.  That means that the title examiner has found some sort of wrinkle in the chain of title.  It's not completely clean, but they're confident that they could defend a claim if the need arose.

From what you've said, you can't even get an insurable title.  That means that the title examiner thinks there's too much risk of a claim and/or that they're not confident that they could defend it successfully.

If the claim was successful and you lose in court without benefit of title insurance, you lose the house.

Unless the title company can look at the seller's claim of winning the fraud case and be convinced of it, this is an enormous red flag.

BTW, there are two kinds of title insurance.  Lender's and owner's.  The lender's policy (mandatory) protects the lender and the owner's policy (optional) protects the buyer.  The bottom line is this; no owner's title insurance, no deal.  Period.

Mike McCarthy · Answer

Good feedback from the other posters. Looking at it a slightly different way, title insurers get their money when they write a policy. They want to get to a clean title so you buy the property and pay them. They will tell you (or the seller) what’s needed to get to a clean title. Often, it’s just certain documents proving that whatever is taken care of.

I would ask to sit down with them (over the phone) and discuss what is exactly wrong and why those docs that the seller gave you don’t clear up the title. I promise you’ll learn a LOT.

Suzy Sevier · Answer

@Sergio Zapata I would let it go or find someone who would insure it. It depends on much time you want to take on trying to get this deal.

Peter Walther · Answer

Did you receive a title insurance commitment, if so there should be a Schedule B-1 which will have a list of requirements to be met before the company is willing to issue a policy?  Is there a requirement that addresses a possible fraud?

Darius Ogloza · Answer

Did you take the seller's paperwork to the title company?  Did you try another title company?  Some may have more restrictive policies than others.  In any event, do NOT buy a property without title insurance, whatever you do.

Jonathan R McLaughlin · Answer

1) take it to another (reputable) title company and see if you get the same answer

2) If its the same answer then ask yourself "Am I the smartest person in the room?"

3) If NO, bail on the deal

4) If you say YES, go back to step 3

Scott Wolf · Answer

@Sergio Zapata, are you going directly to the underwriter(Fidelity, First American, Old Republic et.al.), or to an agency?  An agency will have multiple relationships with different underwriters, and may have the flexibility to issue with a different underwriter.

I've personally experienced deals where 4 underwriters say no, but the 5th says yes.  Where is the property?

Sergio Zapata · Answer

I went to another title company and they told me that they would insure the house, that everything came out good, but now the bank doesn't want to lend me the loan for that house, the agent said to go look for another house that the bank wouldn't take a risk with that house ??

Sergio Zapata · Answer

I went to  another title company and they told me they would insured the house, that everything came out good, but now the bank don't want to lend me the loan for that house, the agent said to go look for another house that the bank wouldn't take a risk with that house ??

Greg H. · Answer

In Texas, title issues(requirements) appear in Schedule C.

Not sure I understand what you are saying, but if there was a title company that insured the property previously, take it back to them as they likely will insure again

What to do if the Title company don't want to insure the house

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