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Gregory Said:

Buying a house without title insurance? What are the risks?

We Answered:

First of all -- if you can't get title insurance, NO ONE will lend you the money for it.

Secondly -- if there is a lien against the home, it must be paid out of seller's proceeds or the seller has to come to the table with money to pay the lien.

NEVER EVER buy a home without title insurance. Title insurance assures you have a clean title.

You may want to consider seeking attorney help or realtor help to write a good contract that she will accept. In other words, she has agreed to sell the property to you for a certain price. You might be able to put something in the contract that says you will clean up the property so the county will stop assessing the lien, but she cannot raise the price of the home and must sell it to you by a certain date (give yourself plenty of time to clean up the property and plenty of time for your loan to go through underwriting -- generally 30 days or less) ...


Additional comment -- I understand that you are paying cash for the property ... but if you don't buy title insurance, you take a big risk on whether that title is clean when you buy it. For example -- let's say this woman was divorced previously and has judgments, etc., on title that for some reason don't surface until after you buy the home. (It has happened, trust me) ... if you don't have that title insurance, then you become responsible for everything and anything on that title. If you have title insurance, it protects your interest, and the title company has to indemnify the title (they have to remove the wrong items that should have been removed when you purchased it).

I can understand it is a difficult decision. If you want to take the risk, then take it ... you may want to talk to the title company and ask them if they will write the policy for you after you purchase it and after you clean it up, so you have peace of mind.

pstang@1omni.com

Julia Said:

do you have to have title insurance on an interfamily house transfer?

We Answered:

The only title insurance REQUIRED in a real estate conveyance (sale, gift, transfer, etc) is that that covers the LENDER, not the borrower(s) and this protects the lender from any defaults in title that might affect the value of the property. You may obtain private title insurance at your option.