Jun 16, 2014

Tip 4-2014: PART 2 - FREE Owners Title Insurance is Never Free

Last week's Tip discussed why the Purchaser of an REO property should select their own attorney or settlement agent. To recap, if the Purchaser uses the REO's non-local firm or settlement agent, these problems could occur:
  1. 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.
  2. 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?
NO! Here's why:
  1. In order to get the "Free Owner's Title Insurance," the Purchaser may still have 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 form our local title insurance companies.
  2. The Purchaser also has to hire the REO's 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 Owner's Title Insurance" policy can sometimes overlook several prior title problems. Remember the 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, 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.
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

No comments:

Post a Comment