Obtaining title insurance _after_ purchasing at auction?


#1

I’m curious whether its standard practice to buy title insurance after purchasing a property at auction (meant for flipping). Or does one simply wait until resale to deal with obtaining title insurance? I did some searching of the forums to see if there was already an answer, and only found a suggestion to get a short term binder policy. Is this what most flippers do? Or do they not even bother with that, and simply get the title insurance at resale time?


#2

Most experienced investors will open escrow pretty quickly after purchase to make sure nothing was missed, but they won’t bother with trying to get title insurance. While contrary to standard real estate practices, most investors also require the use of their own title company, rather than leaving this to the buyers choice. This is a good idea for investors as it helps insure they are working with a title officer that is familiar with foreclosures, and if that investor brings significant business to the title co, it can also help with getting priority access to customer service and other title co resources.


#3

Sean, Thanks for the quick reply! Where else does a company’s CEO reply to a forum post on Sunday afternoon? :slight_smile:

I’m wondering if you could clarify something for this newbie though: what do you mean by “investors will open escrow pretty quickly after purchase to make sure nothing was missed”? Escrow for the resale? What if a buyer can’t be found quickly?


#4

If you explain what you are doing your title co should let you open the escrow and order the preliminary title report without identifying the buyer. Once you’ve found your buyer and the property is in contract just forward that along.


#5

Got it, thanks!


#6

Sean, Would you plesae elabrate on “Most experienced investors will open escrow pretty quickly after purchase to make sure nothing was missed”, does that means once you open escrow, it will automatically got a Prim Title Report? what if you expect a fight on eviction with server month of delay? Please advice! Thanks. John


#7

Yes - a prelim should be ordered automatically when you open escrow, but you can check with your escrow officer to be sure. Doesn’t matter whether it takes 2 weeks or a year to close escrow, they ALWAYS have to update it before recording at close of escrow anyway. One thing to note though is that you really need to be diligent about requiring your buyer to use your title company. This is supposed to be buyers choice so expect some pushback, but stick to your guns as maintaining a title co relationship is far more important for you then them.