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  1. #1
    Join Date
    Aug 2018
    Posts
    10

    Default Do You Need Title Insurance if You Pay Cash for Real Estate

    My question involves real estate located in the State of: Pennsylvania

    We are purchasing a brand new townhome with cash in Northhampton County, PA in an established development (single-family and townhomes built and sold there for seven years). The title insurance seems pretty expensive, especially the "enhanced" version. We're questioning whether we need it, after reading stories of it being overpriced and often containing lots of exclusions to protect the insurer in case anything did happen.

    This is a development with hundreds of homes built over the last seven years, each of which has likely had title searches done, in addition to the developer's title work when purchasing the land. We do own the land under the townhome, I think some townhomes do not come with land or it's leased but not in this development.

    Aren't we paying a professional to do a thorough job in the title search as part of our transaction? Wouldn't we have claim against them if they missed something? Why can this insurance only be bought at closing, preventing us from shopping around after the closing? Prices may not vary much anyway as I believe it's regulated in PA, but it still seems expensive. Understand why mortgage companies would require it to protect themselves, but we're paying cash and this is a brand new townhome.

    Thanks in advance for any help/suggestions.

  2. #2
    Join Date
    Mar 2013
    Posts
    16,858

    Default Re: Title Insurance if Paying Cash

    You need it.

    Years from now if your title gets challenged the people at the title company won't be there anymore and there isn't likely to be any records.

    It would be foolish to go without it, just as it would be foolish not to buy homeowners insurance.

    I bought my current house for cash and have both. Will do the same on my next house.

    The thing about title insurance is that you pay for it once.

    If you want to shop for prices, shop for the title companies and when you make your cash offer, you pick the title company that you want to use. Don't let some realtor lead you by the nose.

  3. #3
    Join Date
    Aug 2018
    Posts
    10

    Default Re: Title Insurance if Paying Cash

    Quote Quoting adjusterjack
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    Years from now if your title gets challenged the people at the title company won't be there anymore and there isn't likely to be any records.
    What if the title insurance company is no longer around?

  4. #4
    Join Date
    Oct 2016
    Posts
    2,846

    Default Re: Title Insurance if Paying Cash

    Each state has a method of paying claims when an insurance company goes under.

  5. #5
    Join Date
    Jul 2018
    Posts
    1,275

    Default Re: Title Insurance if Paying Cash

    Quote Quoting Diver4242
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    Aren't we paying a professional to do a thorough job in the title search as part of our transaction?
    How could we possibly know what you're paying for?


    Quote Quoting Diver4242
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    Wouldn't we have claim against them if they missed something?
    If the answer to your first question is yes, then the answer to this question is maybe.


    Quote Quoting Diver4242
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    Why can this insurance only be bought at closing, preventing us from shopping around after the closing?
    You can buy it any time you like if you can find a title insurer willing to write an after-the-fact policy. However, once you've bought the property, there's nothing you can do about a title defect, so I can't see any incentive for an insurer to do something like this.

  6. #6
    Join Date
    Mar 2013
    Posts
    16,858

    Default Re: Title Insurance if Paying Cash

    Quote Quoting Diver4242
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    What if the title insurance company is no longer around?
    Rarely happens. When it does, the state's guarantee fund (that all insurance companies contribute to) takes over the claims.

    My title policy is 20 years old and the title insurance company is still around.

    I'll give you a personal example of why title insurance is necessary. I bought my first house in 1977. I bought a title policy. Several years later I was appealing my tax assessment and realized that my house straddled two lots and my deed conveyed only one. I was young, what'd I know about legal descriptions. Heck, neither the escrow company or the mortgage company caught it. I called the title company. The claim person contacted the sellers, got the deed corrected and recorded and sent to me and the mortgage company.

    That's why you buy title insurance. That's why you buy any kind of insurance. Things do go wrong some times.

  7. #7
    Join Date
    Jan 2006
    Posts
    38,530

    Default Re: Title Insurance if Paying Cash

    Quote Quoting adjusterjack
    View Post
    You need it.

    Years from now if your title gets challenged the people at the title company won't be there anymore and there isn't likely to be any records.

    It would be foolish to go without it, just as it would be foolish not to buy homeowners insurance.

    I bought my current house for cash and have both. Will do the same on my next house.

    The thing about title insurance is that you pay for it once.

    If you want to shop for prices, shop for the title companies and when you make your cash offer, you pick the title company that you want to use. Don't let some realtor lead you by the nose.
    actually, if there is a title search performed, the title company issues an opinion along with the findings to the purchaser of the search.

    But it wouldnt matter if the title company was around or not. Without title insurance, they won’t do a thing.


    Diver4242

    I know I purchased title insurance after purchasing property before. You might want to check out the matter. Regardless, you should still be able to obtain a quote. If I recall correctly, the last time I purchased title insurance it was a set percentage of the value of the property.

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