Title search and insurance without escrow?

Question

So I am looking at closing on a house at the end of the week, fsbo. The owner is not exactly trusting, wouldn't sign anything until I was happy with the property and was prepared to pay in full.

So I had a property inspection done, which came back fine, he has told me he has a $1500 tax lien which we can take off the amount I am buying the house for. Now I am trying to get a title search done and title insurance in place. Since we will go record the sale together and I will will give him the money that day, I don't see the need for an escrow service, except that it seems I can't get a title search/insurance without it.

To me they are two separate functions, one which I need, and one, in this instance, is just an added $1,100. Can someone fix my thinking, or provide me a solution.

Thanks in advance,

Andrew

John Evan Miller · Answer

On all of the properties that I have gotten title insurance, it has always been more expensive than the escrow service. If memory serves me, the last deal cost me $1,200 in title insurance and $350 in escrow costs.  I wonder if your title company has confused you. I wonder if you are paying for a title SEARCH for $400 but the INSURANCE is actually $1,000.  Might be a good idea to check with another title agency just to make sure you are not being taken for a ride.

As to filing a QC deed or a Warranted Deed, they are both usually one page and need the signatures of both parties - one is not more difficult than the other. But, a WD gives you the full bundle of rights to the property. A QC deed only transfers the rights of the individual who signs the deed - if they have any rights.  You should always go the way of a WD during property purchase.

Shannon Wright · Answer

Being that I am an Escrow Officer (EO) and former Title Officer (TO)....I have a very strong opinion on this.

Cali is the ONLY escrow driven state in the country. There is not one title company that I know of that will insure a sale transaction without someone handling the Escrow portion of the deal. There has to be someone in the transaction assuming the responsibilities of an EO, which a TO will not do.

What is the "Escrow Portion"? We protect and preserve the terms of the contract with neutrality and ensure that all requirements are met as well and handling the deposited funds (including local ordinances and state/federal laws). Title will pay any encumbrances, liens and property taxes but the state required NHD is paid through escrow, as well as prorating of taxes, paying the principals (proceeds and refunds) and issuing closing statements.

Escrow fees are calculated on a formula based on the sales price, so the escrow fee is varied, just like the title insurance premiums. There is no way to combine these roles into one in Ca, you have to have both to have a valid and insurable transaction.

You can pay for a "PRELIM ONLY" for a fee, but they will not actually issue a title policy of insurance without a proper transaction in place.

Natasha Stel · Answer

Hi. Who is the VP that helped you get a title report and title insurance without escrow because we are going through the same issue?

Helene R · Answer

I would think if you are doing escrow as we know it here in AZ the settlement statement would include the payment of any back taxes which the title company will handles when they close the deal.
 I would definetly try for a warranty deed though it just gives you better protection overall.

William D. · Answer

An oral contract for the sale of real estate? Do yourself a favor and look up the statute of frauds. You've already spent time and money on a deal and don't have a legal bat to fight with if the seller walks.

Ned Carey · Answer

I must not be understanding what you mean by Escrow services. In my area we don't use the term. We simply call it a title company. It is the title company that does the title review and acts essentially as an insurance agent and issues the title policy.

I would be surprised if a title company would insure a deed they didn't record, although I guess it is possible and perhaps you have found one the will.

Ann Bellamy · Answer

As long as you can get title insurance, and record the deed yourself, I see no problem with it.  You'll need to take the tax payment, pay it, get the lien release, record it, etc. It's a lot of low pay courier work.

If you have more time than money, go for it.  Personally, I don't see it as a good use of your time, as you could spend it finding another deal.  But if you're not ready to find another deal, and want to educate yourself as to the process, than have at it.

Title insurance, no matter how overpriced, is absolutely necessary given the changing laws today.  In Massachusetts, a judge's decision rendered thousands of foreclosures invalid retroactively.  So borrowers who had spent big dollars in rehab could find themselves not owning the house at all.

Andrew O. · Answer

Seller hasn't said he won't give me a warranty deed, just checking out options. $1000 definitely won't blow the numbers on this deal, I just figure if I can do it myself with guidance from a realtor and title officer, why not? I don't have much else better to do with my time, so it will be interesting navigating this deal.

The $400 is for search, insurance and deed prep.

What I don't get is why everyone jumps up and down about Escrow services being required to give title insurance. Title company does their search, find what they find, and insure you against something that might have slipped under the radar, I don't see that the method of transferring the deed has anything to do with that mechanism. It seems like the title companies have just got everyone trained to do it that way.

I may sound like an amateur here, and I am, but I have completed much more involved legal procedures without the needs of someone holding my hand.

Edit: After further research I have no doubt the seller will be fine to complete a warranty deed, it's just a little more paperwork.

David Beard · Answer

At any rate, the thousand sounds very high.  To the title company, I normally pay $300-325 for closing, $100 for title search, and $75 for deed prep (paid by seller typically).

Ned Carey · Answer

Exactly, that what escrow agents / title companies do. They write the insurance and without the properer formalities they are not going to insure the deal. The quit claim deed is somewhat of a red flag too. Why won't the seller give you a warranty or special warranty deed.

The $1,000 is just a cost of doing business. Reread Steve Babiaks post.  If the deal won't support that $1,000~ cost for full escrow / title work, than it's not a deal.

Title search and insurance without escrow?

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