Question: Shouldn’t the non-title insurance premium fees charged by your title company be as affordable as your health insurance premiums were supposed to be?
Of course they should but, much like health insurance costs post-the Affordable Care Act, things unfortunately aren’t always as they were meant to be or should be!
So Congresswoman Pelosi, What Say You? For New Yorkers What Should Their Title Insurance Non-Premium Fees Actually Be…
How Do You Make Sure That The Fees Being Charged Are Reasonable And Fair?
In New York State if (when) you are asked at the closing table to write out a check for a title insurance policy* you will notice, if you did your homework and checked your title bill with a second provider, that the insurance premium will be the same no matter who provided the cost breakdown (TIRSA Rate Manual).
But while the title insurance premium is a constant the other fees, known by many in the industry as ‘junk fees’, are not.
And because they are not the cost of these fees can vary by hundreds of dollars across the spectrum of firms who provide title insurance.
And of course there are other factors to consider in the process as well.
If you are buying a property your real estate attorney will likely handle the selection of the firm providing title insurance and in a mortgage refinance it will typically be the lender.
And both of these circumstances are more than fine but, given the fact that in any purchase of a product consumers will typically do research and comparison shopping to know that the brand is good and the price is right, some amount of knowledge when it comes to title insurance would probably be helpful as well.
With that in mind…
Title Insurance Rules Of The Road
‘As a primer, title insurance is backward looking and ensures that when you close on a property whether commercial or residential that there are absolutely no encumbrances that could in any way raise questions concerning your ownership rights.
This fact of course makes title insurance very different from the forward looking insurance such as health or automobile that is protecting the policyholder against some potential future unknown occurrence.
But whether backward or forward looking, any insurance policyholder wants to be 100% confident in the fact that were a claim ever to arise, that the financial strength of the underwriter is and will be exceedingly strong and will never pose a problem concerning its ability to pay.
Therefore for the sake of argument, let’s assume that the title insurance underwriter that you choose (because individuals have the right to choose their title insurance provider), your attorney chooses or that the financial institution is working with is one of the financially strongest and highest-rated in the marketplace.
In the case where the underwriter is one of the best, does that fact render the title insurance company chosen to provide your policy irrelevant?
Claims and the Provider Chosen
Sorry, but the answer to that question is no because the policyholder needs to think among other things about the frequency that the title insurance company that they may be planning to use has experienced claims.
Now let’s assume that the title insurance underwriter is one of the best and that the company being considered has an excellent claims (or lack thereof) experience. Does this fact make the choice of a title insurance provider irrelevant? No it does not!
Concerning the question of consumer cost, the answer of whether the title insurance provider that you choose is irrelevant is still no because while the title insurance premium will be the same regardless of the firm that you use, the ‘other’ fees involved in your transaction can and likely will vary widely among firms!
So all things being equal regarding underwriter and claims experience (apples to apples comparison), why not choose to keep more money in your own pocket instead of in the pocket of the title insurance company?
Some title insurance rules of the road…
- In a purchase transaction ask your attorney for a title bill in advance and then ask another title company for a sample title bill based on the location of your property, the purchase price and the mortgage amount. Then compare the two and if there is a large difference do not be afraid to question that fact!
- In a mortgage refinance do the same comparison by providing a second title insurance company with the location of the property and the mortgage amount. Also, depending on the age of the mortgage being refinanced the borrower may be entitled to a reissue rate that is less than the normal premium and depending on various parameters a CEMA (Consolidation Extension and Modification Agreement) may be possible as well that will reduce the mortgage recording tax that is due. Ask the questions!
- Finally, understand that while a borrower or property owner may not be asked, it is their right to choose the title insurance provider that they would like to use!‘
Questions or thoughts about the process or an experience you’ve had in the past?
Let us know either in the comments below or by sending us an email at firstname.lastname@example.org.
*In an all-cash purchase transaction there will not be a lenders policy purchased and it is up to the buyer whether to purchase an owners policy. In our humble opinion it most definitely is!**
**‘An Owner’s Policy is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you have an interest in the property. Only an Owner’s Policy protects the buyer should a covered title problem arise.’ (Source)
He can be reached at email@example.com or at 516.741.4723.