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If you ever bought real estate in the U.S. you probably paid title insurance. This is insurance that covers the value of the loan in the case faulty or fradule

by dzdt 8y ago

If you ever bought real estate in the U.S. you probably paid title insurance. This is insurance that covers the value of the loan in the case faulty or fradulent documents are found making the chain of ownership invalid. It costs like 1/2 of a percent of the property value. That is how YOU pay because of shenanigans like in this article.

tantalor 8y ago
Why don't we have a proof of custody (chain of ownership) instead of insurance against fraud? Wouldn't that be stronger & cheaper?
- macintux 8y ago
  How do you prove the absence of some competing claim? Between tax and debt liens, fuzzy property boundaries, overlapping property addresses (there are two different pieces of property that use my address, only one of which I own) there are all sorts of weirdnesses that can result in uncertainty. (Disclaimer: not in real estate at all, so I'd imagine I'm just scraping the surface of oddities.)
  - fatbird 8y ago
    Among other things, this is what the common law principle of "Adverse Possession"[0] covers: The owner of a property has a minimal duty to enforce their claim on it, otherwise the claim is forfeited. If someone showed up at your house with documents that showed that a title transfer from a century ago was invalid and they were the rightful owner of your land, you could tell them to piss off just because they hadn't tried to enforce the claim previously. Without this principle, no ownership would ever be clear because there would always be the possibility that someone could show up later on and prove they're the real owner. It basically says that, after some point, the status quo rules. [0] https://en.wikipedia.org/wiki/Adverse_possession https://en.wikipedia.org/wiki/Adverse_possession
- chrisabrams 8y ago
  I would suggest looking into buying a small piece of land on the edge of town and request a title search (get a list of previous owners). There you will see the mess that currently exists. We can create the most efficient process in the world with great technology, but it will take a long time before we can have confidence that all of the past records are recorded. If your title company fails to notice a deed from 1912... That's what the insurance is for. Even with the technology the insurance would still exist because it's silly not to buy the insurance. You are protected if the title company screws up with title insurance. In the future insurance would protect you from the "title chain" having bad data.
  - deleted 8y ago
    [deleted]
- tacostakohashi 8y ago
  Yes, it would be, and that's what they have everywhere else. Basically because the relevant governments are too incompetent to organize that, and/or are lobbied by title insurance companies to perpetuate the status quo.
  - pc86 8y ago
    You are wrong in so many ways it's not even worth going into. Please do some research before commenting on topics in which you clearly have no experience.
- refurb 8y ago
  We do, that’s what a title is, chain of ownership. However, mistakes or fraud can happen. Surveys can be wrong and not noticed. Someone can steal someone’s identity.
- jasode 8y ago
  >Why don't we have a proof of custody (chain of ownership) In the USA and most developed countries, we already do have a "proof of a chain of ownership". And, we've had it for hundreds of years. For example, the title deeds and transfer of title documents saved at the county courthouse. The issue is whether the so-called "proof" is : authentic or forged, and/or conflicting with other prior claims. (E.g, is the title transfer document faked? Are the signatures from the real owners? Was the previous person who transferred the title the actual rightful owner?) Ultimately, "proof" of ownership is a social consensus that sorts out the claims and converges on agreement of who owns what. (I made a previous comment about this.[1]) You might notice that "proof" is recursive: if we "prove" that the "proof" was valid, how do we know that proof is valid? Well, things like "title insurance" and/or a court case with a judge/jury to render a final judgement is the process to break that infinite cycle of "proof of proofs". [1] https://news.ycombinator.com/item?id=14553867 https://news.ycombinator.com/item?id=14553867
  - dingaling 8y ago
    In the UK the banks and property agencies are moving away from title deeds in a process called 'dematerialisation' My deeds, dating back to 1949, no longer exist. They were shredded by Nationwide. I have a certified copy but they are considered of academic interest and 'proof of ownership' is now recorded by a database row. Which is terrifying, as a simple clerical error or a system failure could ruin so many lives.
    - bena 8y ago
      I mean, before a simple fire could have ruined those same lives. Also, paper isn't proof against clerical errors.
      - chii 8y ago
        Paper, if recognised legally means you have the responsibility to hold and present it as proof. You could keep the paper in a safety deposit. You can make certified copies. If proof is electronic, you have no recourse if computer error causes a dispute, since you do not hold any proof yourself to present as evidence!
- deleted 8y ago
  [deleted]
- TheCoelacanth 8y ago
  What kind of proof of custody do you think is impossible to fabricate? The fact that title insurance is quite cheap is demonstration that the form of proof we are already using is already very hard to effectively fabricate. There is a huge incentive to fabricate false claims on property, so if it were easy, people would be doing it more often.
gumby 8y ago
When I bought the current house I live in read the title insurance policy I was offered as well as that of the seller. Turns out both policies offered protection in perpetuity. Which means there's no need for me to buy the insurance; if someone challenges my title I can always sue the seller's insurance (even decades later after the seller has died) and make them take care of it. So obviously I didn't want to buy the insurance as I was already insured! Well, very long faces all around the table. Title insurances pretty much have a monopoly in California -- they do most of the title transfers (which they charge for) and refuse to do so if you don't buy insurance from them. I read up on it and technically I can transfer title without them, and should have no trouble finding a lawyer to help me...but all the folks involved live locally and it doesn't pay to piss them off (I later bought more property around town). So...I paid.

by dzdt 8y ago

tantalor 8y ago

Why don't we have a proof of custody (chain of ownership) instead of insurance against fraud? Wouldn't that be stronger & cheaper?

macintux 8y ago
How do you prove the absence of some competing claim? Between tax and debt liens, fuzzy property boundaries, overlapping property addresses (there are two different pieces of property that use my address, only one of which I own) there are all sorts of weirdnesses that can result in uncertainty. (Disclaimer: not in real estate at all, so I'd imagine I'm just scraping the surface of oddities.)
- fatbird 8y ago
  Among other things, this is what the common law principle of "Adverse Possession"[0] covers: The owner of a property has a minimal duty to enforce their claim on it, otherwise the claim is forfeited. If someone showed up at your house with documents that showed that a title transfer from a century ago was invalid and they were the rightful owner of your land, you could tell them to piss off just because they hadn't tried to enforce the claim previously. Without this principle, no ownership would ever be clear because there would always be the possibility that someone could show up later on and prove they're the real owner. It basically says that, after some point, the status quo rules. [0] https://en.wikipedia.org/wiki/Adverse_possession https://en.wikipedia.org/wiki/Adverse_possession
chrisabrams 8y ago
I would suggest looking into buying a small piece of land on the edge of town and request a title search (get a list of previous owners). There you will see the mess that currently exists. We can create the most efficient process in the world with great technology, but it will take a long time before we can have confidence that all of the past records are recorded. If your title company fails to notice a deed from 1912... That's what the insurance is for. Even with the technology the insurance would still exist because it's silly not to buy the insurance. You are protected if the title company screws up with title insurance. In the future insurance would protect you from the "title chain" having bad data.
- deleted 8y ago
  [deleted]
tacostakohashi 8y ago
Yes, it would be, and that's what they have everywhere else. Basically because the relevant governments are too incompetent to organize that, and/or are lobbied by title insurance companies to perpetuate the status quo.
- pc86 8y ago
  You are wrong in so many ways it's not even worth going into. Please do some research before commenting on topics in which you clearly have no experience.
refurb 8y ago
We do, that’s what a title is, chain of ownership. However, mistakes or fraud can happen. Surveys can be wrong and not noticed. Someone can steal someone’s identity.
jasode 8y ago
>Why don't we have a proof of custody (chain of ownership) In the USA and most developed countries, we already do have a "proof of a chain of ownership". And, we've had it for hundreds of years. For example, the title deeds and transfer of title documents saved at the county courthouse. The issue is whether the so-called "proof" is : authentic or forged, and/or conflicting with other prior claims. (E.g, is the title transfer document faked? Are the signatures from the real owners? Was the previous person who transferred the title the actual rightful owner?) Ultimately, "proof" of ownership is a social consensus that sorts out the claims and converges on agreement of who owns what. (I made a previous comment about this.[1]) You might notice that "proof" is recursive: if we "prove" that the "proof" was valid, how do we know that proof is valid? Well, things like "title insurance" and/or a court case with a judge/jury to render a final judgement is the process to break that infinite cycle of "proof of proofs". [1] https://news.ycombinator.com/item?id=14553867 https://news.ycombinator.com/item?id=14553867
- dingaling 8y ago
  In the UK the banks and property agencies are moving away from title deeds in a process called 'dematerialisation' My deeds, dating back to 1949, no longer exist. They were shredded by Nationwide. I have a certified copy but they are considered of academic interest and 'proof of ownership' is now recorded by a database row. Which is terrifying, as a simple clerical error or a system failure could ruin so many lives.
  - bena 8y ago
    I mean, before a simple fire could have ruined those same lives. Also, paper isn't proof against clerical errors.
    - chii 8y ago
      Paper, if recognised legally means you have the responsibility to hold and present it as proof. You could keep the paper in a safety deposit. You can make certified copies. If proof is electronic, you have no recourse if computer error causes a dispute, since you do not hold any proof yourself to present as evidence!
deleted 8y ago
[deleted]
TheCoelacanth 8y ago
What kind of proof of custody do you think is impossible to fabricate? The fact that title insurance is quite cheap is demonstration that the form of proof we are already using is already very hard to effectively fabricate. There is a huge incentive to fabricate false claims on property, so if it were easy, people would be doing it more often.

gumby 8y ago

When I bought the current house I live in read the title insurance policy I was offered as well as that of the seller. Turns out both policies offered protection in perpetuity. Which means there's no need for me to buy the insurance; if someone challenges my title I can always sue the seller's insurance (even decades later after the seller has died) and make them take care of it. So obviously I didn't want to buy the insurance as I was already insured! Well, very long faces all around the table. Title insurances pretty much have a monopoly in California -- they do most of the title transfers (which they charge for) and refuse to do so if you don't buy insurance from them. I read up on it and technically I can transfer title without them, and should have no trouble finding a lawyer to help me...but all the folks involved live locally and it doesn't pay to piss them off (I later bought more property around town). So...I paid.