Title Insurance - beneficial or scam

[Steve Vogel]

Having bought 20 properties without title insurance, I'm trying to understand the value of title insurance to a cash buyer.  I have made an offer on a property in Florida.  The owner wont sell without title insurance, believing they get some benefit from it.  The title companies won't close the deal without it, worried that they will get sued if something goes wrong.    Now, I don't believe the seller is considered an insured person to the title company, so I don't see how they benefit.  I guess I see the title companies concern and I'm wondering if there is a modern internet way to handle escrow and closing that bypasses the local title companies.  As for my risk,  I'm comfortable "self insuring" these transactions.  Do other cash investors buy title insurance or skip it?

[Greg Scott]

More important: it is required by almost all lenders.

And yes, it is beneficial.  If you ever have a title problem pop up after closing, you could lose your entire investment.

[Wayne Brooks]

I would always buy it.
Having said that......

Yeah, no benefit to seller, unless the seller thinks there may be a problem pop up, and if you have title insurance you wouldn’t come after them.

A title co. doesn’t Want to close without selling you title insurance because they make about 70% of the fee, which in FL is about 0.55% of sales price, unless it is a low value property. The title co. would not have any liability for doing the closing without it....just a simple disclosure you would sign.

[Tom Gimer]

@Steve Vogel Title insurance is useless... until there's a claim and you didn't buy it.

Seller won't sell unless you purchase an owner's policy? Odd. Begs the question: what do they know that you don't? Or perhaps they are clueless.

Title company can close no problem unless they are not comfortable accepting certain warranties from your seller.

[Jay Hinrichs]

just find another title co.. its not mandatory to buy insurance.. seller is being well a seller..

in low value assets in lot and block distriptions in cities .. and your buying and holding with no intention of selling anytime soon or at all.. then you can self insure.

I mean we buy all sorts of foreclosures at courthouse steps and non of those are insured..

but for the average investor who is NOT paying cash like you are .. lender requires it.

and if buying any property in the country or not in a well defined area I want insurance.. I am doing that right now were I have a potential 600k property landlocked that Chicago missed... if they cant get me my write of way they are going to cut me a large check.. and I paid maybe 1k for the policy..   so you need it when you need it.

but if I was buying low end rentals in a city and had no intention of really ever selling them.. then no insurance could be an option.. but I would do what I do know.. my own search before I buy .. so I know state of title before I close on it.  I would not just buy them without that.