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Title insurance on resale?

cubigbird

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Looking to pick up a WKV on the resale market for not much - less than $500 for 81K SO. Is there any reason I need or should pay $180 for title insurance through LT Transfers?
 

vacationtime1

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None whatsoever. What are the odds someone will claim they are the rightful owners and hire a lawyer to prove it? And if they do, you lose all of $500.
 

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I wouldn't. What's the worst case? Someone comes along claiming they have a right to the title. You hand it over and lose $320?
 

CalGalTraveler

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I disagree. It is not about the value of the timeshare. It is about not clouding the title so you can dispose or deed it back someday. Title and third party processors make mistakes. Perhaps the biggest error is entering the wrong location or unit on the deed. (It happened to me. Fortunately, we were able to correct in time and contacted the seller to file a revised deed with the county.)

Biggest risk are properties that have been resold several times vs. sold initially from the developer. The opportunities for grammatical and other errors about title increase exponentially the more the property changes hands.

For me $180 is a small price to sleep at night because I don't want to be 10 years down the road with the seller nowhere to be found and stuck with a maint fee for life with a property that cannot be transferred, (or VSE refusing to deedback) because the title is clouded.

The only exception is if the property is in a non-judicial, anti-deficiency state like Florida or California where you have recourse to walk and enable the developer to foreclose without pursuing your other assets. However I would prefer to pay $180 to avoid the hassle and risk of a credit hit and bill collectors. I believe AZ is not one of those states.
 
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SMHarman

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You can follow the chain of title at the Maricopa County office online and download all the prior titles.

That's what I did with a $15k WKV purchase. I was buying it from the original purchaser from the resort. I could see the steps and decided not to worry.

Title insurance is a peculiar American thing.
 

cubigbird

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What if everything verified according to the estoppel / resale information sheet? The seller is using Redweek verified and we are using LT Transfers to close. You’d think it should all check out given those parties?
 

CalGalTraveler

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Nope. You need to verify the deeds and selling agreements are correct - line by line. And even then how do you know if the last agreement and deeds were correct? IMO, you can check county records but my time is worth more than $180 for such boring and painstaking work. I also prefer the guarantee the title company provides because unless you are a timeshare lawyer you don't know what you don't know when it comes to the paperwork - LT transfers is just a volume paper processing house and they won't back you if there is an error unless you catch it before close.

YMMV when it comes to risk and how much $180 is worth to you. Counties often charge for pulling such records too.
 
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tschwa2

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My understanding is title insurance only protects you up to the value of the purchase price. So if it is something long and complicated they will just say- its too long and complicated for us to fix- here is your $500 back have a good day. If that is the case (which I am not sure it is) then paying $180 to insure $500 isn't worth it. Also this isn't a title search or verification. So no one is going to go through things line by line unless there is a claim that the title isn't valid and then again if they think researching and fixing it would be more than $500 worth of work they won't bother. It would still be your problem but you would have your $500 back. On the other hand if you are getting insurance on a $20,000 timeshare they can do a lot more work on it before it is worth throwing up their hands and handing you $20,000.
 

CalGalTraveler

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My understanding is title insurance only protects you up to the value of the purchase price. So if it is something long and complicated they will just say- its too long and complicated for us to fix- here is your $500 back have a good day. If that is the case (which I am not sure it is) then paying $180 to insure $500 isn't worth it. Also this isn't a title search or verification. So no one is going to go through things line by line unless there is a claim that the title isn't valid and then again if they think researching and fixing it would be more than $500 worth of work they won't bother. It would still be your problem but you would have your $500 back. On the other hand if you are getting insurance on a $20,000 timeshare they can do a lot more work on it before it is worth throwing up their hands and handing you $20,000.

I had not see this limit, so if true this would affect my opinion that it has more value for larger transactions.

Regardless, they do conduct a title search upfront to look for filing errors, and encumbrances which inevitably surface such issues. That's the painstaking work I would be happy to avoid. If the prior purchase was by the developer your chances of error are much less. But if this is a long string of resales, IMO well worth it for a free timeshare.
 
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cubigbird

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If title is found not good, how could I be stuck with it and perpetual MF down the road if technically I wouldn’t be the owner because of the said title problem? As I understand it, wouldn’t it revert back and I’d be out the $450?? Essentially I’m “insuring” a clean title??
 

CalGalTraveler

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If title is found not good, how could I be stuck with it and perpetual MF down the road if technically I wouldn’t be the owner because of the said title problem?

Check with a lawyer but from prior threads, lawyers for the developer would argue, that you paid for the timeshare with a sale deed and county filing which is signed by you. You are listed and using the property with the developer. So either you are fraudulently trespassing, or you have become a defacto owner when it comes to maint fees. It's not the developer's problem the property title is defective and clouded. You would pay much more than MF to fight their lawyers and prove this unless you walk, however, AZ is not an anti-deficiency state so they can come after your other assets to claim back MF and legal fees.

For this reason, we will not buy any more timeshares or (points programs) in states that don't have anti-deficiency laws. I want to walk if something catastraphic happens, and don't want to be potentially stuck with an albatross until I die. Such consumer protection is much better protection than title insurance.
 
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Pathways

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If title is found not good, how could I be stuck with it and perpetual MF down the road if technically I wouldn’t be the owner because of the said title problem? As I understand it, wouldn’t it revert back and I’d be out the $450?? Essentially I’m “insuring” a clean title??

That is correct. It is Title INSURANCE. As mentioned above, on a $500 property they would most likely just cut you a check.

That's why on a house, there are typically two policies. A 'lender's' (Which only insures to the value of your mortgage for the lending bank), and an 'Owner's' (which increases the $ amount of the policy to the price you paid for the property.
 

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For this reason, we will not buy any more timeshares or (points programs) in states that don't have anti-deficiency laws. I want to walk if something catastraphic happens, and don't want to be potentially stuck with an albatross until I die. Such consumer protection is much better protection than title insurance.

For those with concerns like this, save the title ins cost and just put the deed into an LLC. Solves all of these problems!
 

CalGalTraveler

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You are also buying a title search as part of the insurance but you must read the policy to see how far back they go. If they only do the last transaction, then you may be able to DIY on a $500 sale. However if there is a long history of resales, buyer beware. What you don't know is if there was a prior sale and the seller DIY'ed the transaction and made a county filing or sales contract error which could come back and bite you.
 

cubigbird

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So what you are saying is I should spend the $180 to get title insurance?
 

cubigbird

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For those with concerns like this, save the title ins cost and just put the deed into an LLC. Solves all of these problems!

How can do that without Vistana not liking the transaction due to Viking Ships. I’m not a Viking Ship.
 

Pathways

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How can do that without Vistana not liking the transaction due to Viking Ships

What does 'not liking the transaction' mean? Who cares if they 'like' it? Do you have first hand evidence where they have refused a llc?

I don't own Vistana, so I can't say. But I do own in the five major groups and four 'one off's' and have NEVER had it questioned.
 
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