Title insurance for property bought at auction


#1

Great site and lots of useful information.

If I intend to purchase a property at auction and “flip” it, I don’t believe there is time or it is possible to get title insurance prior to purchasing a property at auction. After the auction, title is what it is, so why would I purchase title insurance at that time? If it were possible to purchase title insurance at that time, what benefit would it provide? Wouldn’t I just wait until selling the property and purchase title insurance at time of sale?

Thank you


#2

It is not possible to get a title insurance policy at trustee sale. It is possible to purchase an owners policy after the sale which would insure your ownership interest in the property and more importantly make sure you had clear marketable title.
Most investors that are “flipping” properties will open escrow and get a preliminary title report to make sure that there are no clouds on title that would prevent them from selling the property. Essentially the prelim would say that if a buyer presented themselves the title company would be able to issue an owners policy on that property. Occasionally title issues do come up in the prelim and this also gives the investor the ability to work on the curative title work while they are preparing the property for sale.
You can always consider buying a binder policy which would be 110% of the owners policy and when you sold the property you would get that money back less 10%. It could be a good option if you are concerned about other liens being recorded or intend to hold the property for longer than a few months.