The "Dirt" on Title Insurance Companies in Florida

The “DIRT” on Title Insurance Companies in Florida

Do I really need title insurance when buying a home?  

Title Insurance is as important as Homeowners Insurance for anyone buying Real Estate in Tampa Bay. It insures the home buyer for any title defects, mistakes, omissions or fraud.  

It also allows for dirty dealings behind the scenes…read on.

The "Dirt" on Title Insurance Companies in Florida

Title insurance is a one time charge at closing for the Owner’s Title policy, if you are paying cash.  Or for the Owner’s Title policy plus Lender policy if you are financing.  The Owner’s Title policy is not mandatory but if you are smart you will buy it…   

Are there different types of Title Insurance? 

No, but there is a big difference in the quality of the Title Company.  Title insurance carriers are financially rated like Auto insurance carriers. The quality of work is as good as the Title Company Agent doing the review/paperwork and the underwriter that is writing the policy.  

What to Know on Florida Title Insurance

It is common knowledge that many Florida Title companies do not always operate under a system of care that the buyer can rely on. 

Smart homebuyers always choose their own title company or at minimum they hire a Real Estate Attorney to review and correct the closing documents.  

I say “correct” because the non-attorney title company mistakes are always detrimental to the home buyer.  A bit later you will read the shocking stories

Title Insurance in Tampa Bay is a negotiable item in the contract and whoever pays for the Title Insurance controls which Title Company that does the title work.  

The home buyer has the legal right to pay for and choose their own Title Company to scrutinize the title search, lien search, check for encroachments, verify the tax payments, make sure that the sellers costs are not charged to the buyer.

Homebuyers really need to make sure that the final charges are correct, that the title company did not dilute the buyers protection, that you are really buying the property you think you are purchasing, and most importantly that the liens that encumber the property are actually all paid off.   

Don’t think for a moment that these things do not happen…did you know that the law requires that a title agency office only needs one licensed title agent? …the rest of the clerks working on your file can be someone hired yesterday for on-the-job training.  

We always recommend that the buyer choose their own Attorney/Title Company and not use the sellers or seller agents preferred  title agent…they have no interest to dig deep, find a problem or resolve issues for you, as most real estate offices have an “Affiliate” relationship with the seller’s agent, not you.  An affiliate title company will never “rock the boat” for you because they cater to the “affiliate” hand that feeds them.  

You are spending hundreds of thousands of dollars or maybe several millions of dollars buying a property.  It is probably the biggest purchase of your lifetime.  Now is not the time to cheap out on protecting yourself.  Even simple title issues can be a nightmare to fix and may cost more than you can imagine. Title Insurance Companies in Florida

What’s an Affiliate company?   

It is a joint venture or affiliated business arrangement between a Title Company and a Real Estate company.  Federal Law governing (RESPA: Real Estate Settlement Procedures Act) does allow for affiliated business arrangements but prohibits a realtor from receiving a kickback or anything of value in exchange for the referral of business to a title company.  That still does not stop the greed…

Today, there still exist circumstances where such payments, gifts or other benefits are being made.  More than once, I have had a seller's agent tell me that if the buyers do not use ”their” title company, they will kill the deal…do you really believe that the agent was not getting a kickback? Of course they are, even if it is against the law.

Do Affiliated Business Arrangements need to be disclosed?

If the listing office is receiving a financial benefit for referring business to their affiliated title company they are required to disclose this to buyers.  Many times these are not disclosed on the resale market, however, new construction contracts have this disclosure.

Buyers Broker of Florida Does Not Take Kickbacks

As a Broker of 30+ years that refuses to be beholden to anyone, (except the homebuyer) we never look for a handout.

Buyers Broker of Florida has no affiliates and we do not take any kickbacks from title companies, inspectors, appraisers, lenders, insurance companies, home repair providers, home warranties or from anyone. 

Florida Title Insurance Horror StoriesYes, we have been offered perks in exchange for referring business…we were offered a free “transaction coordinator”, gift cards, paid for marketing and even monthly rent for office space that I don’t have.   

The last offer was this year from a title company.  When I declined, they were so shocked that the office manager called me back to ask me “why not”? 

 

HERE ARE SOME TRUE STORIES: 

1.  Only a portion of the property was transferred:  

The title company, which was owned by a large real estate franchise office, transferred only part of the property to the new buyer, even though the purchase contract clearly stated that there were two parcels in the sale.  

It was discovered that the driveway parcel was excluded and left to the seller who ironically was trying to sell that parcel to the neighbor.  

Luckily the buyer’s attorney found the mistake when reviewing the closing documents.  Can you imagine trying to retrieve the missing piece of your property after it is sold to the neighbor? 

2.  Liens against the property were not paid off.   

The payoff to the Homeowners Association for the sellers back debt was $8,753. It was collected from the seller at closing and was supposed to be paid directly to the HOA upon closing.   

Instead, the title agent sent the money to the seller’s attorney in Miami who claimed he never received it.  Meanwhile the HOA was adding fines to the new buyer for the deficit. Months later it was still not resolved so the out-of-the country buyer had to hire an attorney to straighten it out. 

3.  IRS demands $40,000 from the buyer after closing.

Buyer buys a town home. Two months later, he gets a letter from the IRS for $40,000.  The seller was to pay the taxes at closing.

Title company “forgot” to pay it as required.  Luckily the title company still had the money in their coffers.

4.  Dishonest Title Co. in cahoots with a dishonest Realtor.

Do I need title insurance to buy a home?

My buyer was buying a property located in an HOA (Homeowners Association).  I ask the title company for a HOA estoppel  (that is an accounting that comes from the HOA and shows what the costs are and if the owner is currently up to date on payments.  Title company tells me there is no HOA.

The sellers/listing agent ALSO tells me that there is no HOA, despite the fact that the community did have a pool and clubhouse.

I asked who is then maintaining and taking care of the pool and clubhouse?  The seller's agent tells me that the “good samaritan homeowners” got together and are paying the cost of upkeep for the community property…with their own money.

OK…I am not gullible so my spidey senses are on fire…

I started digging for answers, only to discover that indeed there is an HOA and the seller has not paid anything to the HOA for 3 years…

He owed over $10K plus penalties.

Oh, by the way…the title company and the seller's real estate agent were both related to the owner.  Are you surprised?

5.  More dirty dealings between Title companies and the Agents who feed them business. 

This situation happened in a townhome community in Coquina Key, St. Petersburg.  Seller's agent is also the president of this Town home community.  He was a seasoned broker who played by his own rules.

I set up a walk-through (to check the property over before the buyers release their funds) for 9 am on the morning of the closing, to make sure the property was in the same condition as when buyers bought it.  

The seller's agent says we have to move it to 10am because he claimed that the seller was doing some last minute cleaning…(yet we later learned that the seller was not even in Florida).

However, at 9:30 am this dishonest agent tells ”his” title company to go ahead and close the transaction and fund the money…even though he knew that the buyer had not yet done the walkthrough, because he changed the time to check the property to after closing.

We were not due to check the property till 10am! Of course the title company did as he requested…even though it is their duty to confirm with the buyer! 

We discovered that the seller removed many things that were to stay, including a house full of designer drapes…and the place was not cleaned.

Home buyer should take title insurance seriously

I called the title company only to be told that they took the word of their long term “partner”.  

Yes, the real estate office and the title company were buddies who did whatever the “hand that feeds them business” needs…even if they breach their ethical duty to the buyer.

It's a fact that in Florida Real Estate, it is common for agents to have their hand in the Title company’s pocket…or maybe the Title company has an incentive to provide benefits to the agent even when it is illegal and a violation of RESPA. 

We are the only office that I know for sure has never sold out a client over money, perks, gift cards or free lunches.  Our hands are clean. Call us for 100% buyer loyalty…your best interest is our only priority.  

https://www.tampabuyersbroker.com/contact/

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