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Comment by koolba | Hacker News Reader

Of all the scams associated with real estate transactions, title insurance is kind of legitimate. The title chain itself may be recorded, but there may be some lien against the property that was not properly recorded. That’s the situation you protecting against.

Now whether that’s worth .5-1% is debatable.

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I’m pretty confident that payouts from title insurance don’t even reach 10% of the premiums collected. That’s my definition of a scam.

> Of all the scams associated with real estate transactions, title insurance is kind of legitimate

As someone who has submitted (and failed to collect) on a claim against title insurance for legal fees incurred to correct a mistake in the original title that the title company missed, I'm skeptical of its value, at least for things like erroneous lot lines.

What was their reasoning for not paying out?

They claimed that they had correctly interpreted the documents as presented. The issue was that my condo (in a 2 unit condo building) hadn't been correctly deeded one of the 2 parking spaces, even though the building was designed and used that way for decades.

They claimed that the seller misrepresented the property by claiming it came with a parking spot.

Oh don't get me started on title insurance in Texas! It gets prorated depending on the last time you purchased or refinanced the property, but it has to be renewed every 7 years! Mind you 7 years ago they checked and verified it was good, so why do I need to renew when we know there are no issues with the title? If you notice, most title offices are very nice, beautiful buildings, fancy furniture and furnishings. That is what you are paying for!

Title insurance is a real thing, but it is wildly overpriced for the actual risk.

I hear they basically never payout in the event of a problem

Does anybody know of someone making a successful claim with Title Insurance? I've long been skeptical about how often those situations happen.

I’ve read stories of it happening but title insurance refuses to pay

The seller really should be liable for all of that

They'll just pass the cost on to the buyer in the price.

Yes, but if you only discover a decade later and the seller is long gone...

If so then there are laws to consider that any property that is not protected becomes legally owned by the one who has been servicing/inhabiting it, which is a bit before that decade would end.

The core problem of the lien is solved, the only thing left is to ensure the lawyers who seem to always get their cake no matter what aren't bloodthirsty enough.

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