Title insurance on HUD properties?

General Real Estate Investing
1

Hey guys,

Is title insurance necessary on properties being purchased from HUD?

I know in most cases, its very important. But if the title is coming from the government to me directly…I can’t imagine why it would be necessary.

Thanks!

2

I know from your previous posts that you are located in Texas. In Texas title insurance is not required by law. Since you are paying cash I don’t see why you would be required to pay it. HUD’s title company may be telling you that you have to have it but legally you don’t. As you said though it is very important. In your case it will protect you from a clouded title. You don’t to worry about mechanics liens, but you do have to worry about a distant relative of a previous owner showing up with a claim on the title. They may or may not get the house, but you will spend a bundle on legal fees. HUD should pay for most of it anyway.

3

HUD issues a title free of liens and encumbrances. HUD uses a special warranty deed to transfer title to you. HUD does not warrant the title history, just that they did nothing to cloud title during their ownership. You still need title insurance to protect yourself against an undiscovered defect in the title chain prior to HUD’s ownership.

If you are financing the purchase, your lender will require lender’s title insurance. May as well get the owner’s policy for a few dollars more.

4

Thanks for the feedback guys. It’s a cash deal, but I’ll shell out the ~$250 or so anyway. What the he** - that’s about 1/2 an hour in lawyer’s fees. LOL.