Feb 23, 2012

Tip 8-2012: REO (Free Owner's Title Insurance is Never Free-Part 2)

Tip 8-2012: REO (Free Owner's Title Insurance is Never Free - Part 2) 

Last week's Tip discussed why the Purchaser of an REO property should select their own  attorney or settlement agent.  Briefly, if the Purchaser uses the REO's non-local law firm or settlement agent, these problems could occur:
A.  The REO's settlement agent may not have the Purchaser's best interest as their primary goal, as they regularly represent their large REO Seller. 

B.  There can be numerous delays and inconveniences for the Purchaser, their Lender and Realtor with the actual closing, because the REO settlement agent is not local.

But what about the "Free Owner's Title Insurance"?  Is it worth the inconveniences and potential conflicts?  Absolutely NOT and Here's Why:

1.  In order to get the "Free Owner's Title Insurance" the Purchaser still has to pay additional title expenses (title search fee, binder fee, copy charges and a lender's title insurance policy.)  Sometimes these extra expenses will exceed the cost of title insurance from our local title insurance companies.

2.  In order to get the "Free Title" the Purchaser has to hire the non-local settlement agent or law firm and pay all of their fees for the closing.  The fees for these settlement services may equal or exceed the cost of our local real estate attorneys and settlement companies.

3.  The actual "Free Title Insurance" policy can sometimes overlook several prior title problems.  Remember this title binder is being provided by the same REO bank which may have created problems in the foreclosure process.  It's like letting the "fox guard the hen house".  The Purchaser of an REO property needs to have their own title search and policy.

For all of these reasons and others, Never allow an REO Purchaser to use the same settlement agent who represents the REO Seller.

The REO Purchaser needs a local real estate attorney and title insurance company representing only the Purchaser's interest.

Please contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.


William D. Tucker, III 
Charlottesville 434-973-7474 | Lake Monticello 434-589-3636  
Personal Injury - Divorce - Criminal - Workers Comp - Disability - Real Estate - LLCs - Wills 

Like us on Facebook Visit our blog Follow us on Twitter

No comments:

Post a Comment