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Title Insurance

toocherie

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I'm in escrow to buy Marriott Shadow Ridge and wondering if I made a mistake in requesting title insurance as part of the purchase. The cost for the title insurance is approximately 10% of my purchase price--almost as much as the entire closing fee. But, having always gotten title insurance in my normal real estate transactions I just automatically requested it. The closing company being used on the transaction does do some basic checking--but in everyone else's experience is title insurance recommended in a timeshare purchase or is it just extra expense and time? (Basically, we're pretty much ready to close I believe except that they are waiting on the title report). It may be too late--since the report has been ordered--to cancel it now but thinking about future purchases too!

Thanks.
 

richardm

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I always recommend title insurance, especially for California since the real estate taxes are not billed or collected by the resorts. I'm pretty conservative by nature and prefer the peace of mind..

Other members will tell you it's a waste of money.
 

toocherie

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I'm pretty conservative about stuff like that too (being that I'm a real estate attorney :D )

but now of course I just want to get closed so was beginning to think maybe it was an unnecessary step--but given your reasoning I am glad I went the extra step.
 

bnoble

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It all comes down to your own personal risk tolerance.

I've never paid very much for any of my deeds, so I never had very much at risk. For a more expensive week, I might think differently.
 

toocherie

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I guess I'm not as concerned about losing the sales price (although more than a supercheap price like $10 or something it still wouldn't be the end of the world) than I am somehow inheriting an obligation I didn't know about.
 

Dave M

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From a practical standpoint, there are only two obligations that a timeshare has more than a very remote possibility of having attached to it. One is delinquent maintenance fees. The other is a mortgage provided by the developer, assuming the seller bought directly from the developer. Both of those contingencies can be uncovered, if they exist, with the estoppel process, in which the closing agent will/should ask the resort/developer those very questions and get a written response.

Why wouldn't a mortgage be written by someone else? There are apparently only two lenders that will lend on a resale. Both of them (Tammac Financial and FirstAgain) write their loans as consumer loans, which don't attach to the timeshare as security. Even many developers write their loans as consumer loans.

What about liens, such as IRS liens or mechanics liens for unpaid contractor work? Such liens for timeshares are so rare as to be almost not worth mentioning. If the IRS says you owe tax and you don't pay, they might file a lien against your home or levy against your wages. They know where you live and they know where you work. But it's a good bet that they have no clue what timeshares you own.

Similarly, although a contractor might file a lien for unpaid work on your home, imagine the difficulty for a contractor at your resort trying to file liens against all 10,500 owners (assuming 200 units X 51 weeks). It won't happen!

Thus, the most practical reason for getting title insurance is if you are concerned about validity of the title that passes to you. If you can determine that the current owner purchased directly from the developer (take a look at a copy of the seller's deed), even that is a remote risk.

Bottom line? Unless you are paying a lot for your timeshare, the cost of title insurance probably doesn't make sense.

IMHO. :)
 

El Codo

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Clarification about IRS Tax Lien, Please

[Duplicate posts are not allowed on TUG. - DeniseM Moderator]
 
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