Oct 27, 2009

Tip 41-2009: REO and "Free" Title Insurance

“If it sounds too good to be true it probably is”. “You get what you pay for”. Two sayings to keep in mind when buying property from an REO Seller that offers in the contract to provide “for free” the owner’s title insurance binder for the purchaser. We have discovered that closings are delayed due to the fact that the Seller’s title company does not produce the title binder in time, sometimes not providing the binder until the day of closing. Also the REO provided policies are short form title insurance binders which do not list the exceptions such as easements, restrictions, etc on the property. Sometimes, the REO policy is just wrong (unpaid real estate taxes). Finally, the buyer may not actually save money as he is still responsible for payment of the search fee and lender’s policy. These payments to the REO title company sometimes exceed the cost of obtaining title insurance from the local title companies.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia

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