Tip 3-2014: FREE Owners Title Insurance is Never Free

REO Sellers ("Real Estate Owned" by banks, Fannie Mae or Freddie Mac) often try to direct the Purchaser to use the REO's attorney or settlement company. This practice usually includes a provision in the "REO Addendum" providing the Purchaser with a free owner's title insurance policy if they use the REO seller's settlement agent. 

NEVER FALL FOR THIS ATTEMPT TO DIRECT THE PURCHASER'S CLOSING TO THE BANK'S SETTLMENT AGENT.  

Here's why: 

1.  To receive the Free Title Insurance, the Purchaser must allow the REO Settlement Agent or Attorney to represent both sides. This non-local law firm or settlement agency receives all of their business from the Bank, Fannie, or Freddie. Their goal is to represent the Purchaser so allegedly things will go smoother for their main client - the REO Seller. If a conflict arises at closing, do you really believe they will favor their new client (the Purchaser) over their larger regular client (the REO Seller)? Whose interest are they really looking out for? 

2.  The settlement agency or law firm which normally represents the Seller is never local. They may be from a nearby state like Maryland, or if from Virginia, areas like Richmond or Virginia Beach. All communications with them and the Purchaser, the Lender, and the Realtor has to be through long distance, fax, or email. The only time they appear locally is when they send someone (usually a notary) to perform the signing of the closing documents. Is this a reasonable way to obtain a smooth closing? Is this the type of service you look for? Do you really want the Purchaser to close with a notary at a fast food restaurant? 

Stay tuned for a future Tucker's Tip that will discuss the real economic costs of the closing and the "Free Owner's Title Insurance."

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

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, VA
434-973-7474
www.TGBlaw.com