Title Insurance Tips

Title insurance is still a misunderstood subject among investors. I thought I’d give you some tips to help protect you with your real estate closings.

Let me start by saying, it is critical that you always purchase title insurance whenever you purchase a property. Title challenges do not happen often, but when they do, they usually require tens of thousands of dollars to rectify. They are not usually small little issues.

Even if you will only own the property for an hour, you need to be covered.

I know that seems counter-intuitive… if your ownership is very brief, what could possible change in the title after the title was checked.

What most people don’t realize though is that when you sell the house under a General Warranty Deed, you are warranting clear title up to the point of your transfer to your buyer. That means you become responsible for any and all title challenges even before your ownership.

If your buyer is faced with a title challenge, they will turn to you to correct the problem and to pay whatever costs are incurred. As I stated earlier, that is usually tens of thousands of dollars. If you have title insurance, you simply pass the problem on to your insurance carrier.

When purchasing Title Insurance, you’ll have two types: Owners Title and Lenders Title. You don’t need to have a Lenders Policy, but most institutional lenders will require a policy written in their name. The insurance pays off the debt in case of a claim that cannot be settled. Each lender receives their own policy, and it is written in addition to the Owners policy which covers you for any equity in the property above the debt.

So how much insurance do you need? The policies are written for the amount of the purchase and/or the amount of the debt on the properties. As investors, though, we often increase the value of the property after close via renovation. So what happens if you have a claim against title which occurs after your renovation? How do you cover this additional value if the policy can only be written for the purchase amount? In fact, my attorney was just telling me the story of an investor who purchased a property for $30,000, but was putting $100,000 into renovation. What would a $30,000 policy do for him after the renovation? Not much.

To resolve this deficit, be sure to purchase a rider to the policy for the full After Repaired Value of the property. If there is a claim after you have begun renovations, the rider will kick in to cover you up to the current appraised value of the property.

What I have discovered is that there are a few closing agents that have never heard of this and they will argue with passion that you cannot insure the property for more than the purchase price. Stand your ground and ask them to call the insurance company to see about a rider. I have made more than a couple of attorneys do this and each learned something new that day. One of my personal mentoring Clients closed on a house recently where the attorney would not increase the policy value and said that riders did not exist. His answer was that if there was a title claim, then you could get an appraisal and purchase the additional insurance.

Can you believe that? What insurance company would say, sure… you can increase your coverage now that you have a claim. No problem. That would be like sitting here on the coast and calling my home insurance company while a hurricane is ripping off my roof and ask to increase my coverage to cover the loss. It’s not going to happen.

My rule is simple. If the closing agent won’t provide the rider, I find a new closing agent. Remember, in the end, they work for you.

Finally, make sure your title policy has gap coverage. In this case the “gap” is the time between when paperwork is taken to the land records area, and when they appear on the books. I have seen that gap as long as six months in large counties. Without gap coverage, any claims for issues that occurred during the gap would not be covered.

And here’s the crazy part… covering the gap is usually just a check box on the policy and cost nothing extra. Why wouldn’t you want it?

Title insurance often seems like a useless expense, and for the most part it is. But when you need it, you really need it – and there is no way to predict on which property you’ll need it. So always buy a sufficient amount to cover your assets.

Lou Castillo has been successfully investing in real estate since the early 1990s. His hundreds of completed property transactions include rehabs, rentals, wholesales, and lease options.

Automated Real Estate Software – The New Trend in Investing

The value of real estate has appreciated in the last few years. It also shows great potential for growth. Hence, now might be the best time to look at an investment in property. However, if you’ve spoken to someone who already has his knees deep in real estate investing, you will realize that a lot of things are easier said than done.

It requires skill and experience to scour the market for high value properties.

Then comes landing good buyers.

Finally, there’s a humongous amount of paper work to handle.

This is where real estate investing softwares might lend a hand. They automate the entire process of real estate investing. If you would like to know more about such applications, here’s a low down on some of the common features they offer.

Lead generation –

At the click of a single button you are able to find a comprehensive list of buyers and sellers scattered across the country. The information elicited includes names and mail addresses of buyers, owners of properties, the type of property (bank owned, foreclosed, low and high equity, absentee owner etc.) and amount of cash paid.

Website creation –

Every business needs a website, especially if you do not have a physical location from which operate. Not all of us know the technicalities of writing HTML codes and designing a website. The real estate softwares can help you create targeted and user-friendly websites that you can use to showcase your business.

Direct mail generator –

Marketing is the soul of a real estate business. The more you network the more leads you can generate. The direct mail generator feature helps you setup a highly productive and efficient mailing system. You can send out emails, newsletters, posters and flyers.

There are a range of pre-made email templates you can use to send out messages to your leads. Autoresponders make sure you can keep in touch with sellers and buyers even when you are not physically present to answer their queries.

This feature is a highlight feature of most real estate software given that the savings in time and money are large.

Investing tips –

This is a section that most newbies can benefit from. Most applications include a resource library with info on the basic aspects of the trade. An open community of members can also give you an opportunity to interact and build your resource with real-time knowledge about making, building and closing a deal.

Diverse user base –

Modern-day automated real estate investing software applications cater to a varied group of investors. It includes those who buy, fix and flip properties. If you are a landlord, it can increase the convenience of managing your properties including finding tenants and repairing and renovating properties between subsequent deals. There are also features that rehabbers and builders of new constructions can use.

Contracts and paperwork –

Real estate investment also means a lot of paperwork. Most applications offer tools to generate contracts. Features such as auto-fill enable you to fill personal details into letters, contracts and other property-related documents. You can sign them online, and then email or fax them free of charge.

There is one thing – you need to be realistic. Real estate softwares are tools you can use to streamline your business. You should have a real estate business to start with and some basic know-how on investing.

All That You Need To Know About Trust Deeds

A Trust Deed is a document which is mandatory when a real estate transaction is involved in the US. It is through this deed that the legal title of a property is transferred from the borrower to the trustee. The lender treats this deed as security for the loan that he offers to the borrower. In the world of the trust deed, the borrower is known as the trustor and the lender is known as the beneficiary. Sometimes, a trust deed is also known as a deed of trust. The firm that takes care of the preparation of this document and handles the transfers of legal rights is known as a trust deed firm. Getting the help of a professional firm is very important if you want to avoid illegalities in this transaction.

Difference between Trust Deeds and Mortgage Loans

In a mortgage loan transaction, there are only two parties concerned – borrower and lender. In a transaction involving a trust deed, there are three parties involved – lender, borrower and trustee. The trustee will hold the property and the legal rights involved in the same, on behalf of the lender. Once the borrower has paid the loans fully, he takes back his property document from the trustee. For the lender, it is beneficial to get into a trust of deed agreement, because he can count on the trustee for any issues that may arise from the property. In a mortgage loan transaction, the title of the property is transferred to the lender directly.

The method of foreclosure is quite different for a mortgage loan and a trust deed transaction. In the former, the process is quite long and involves lots of communication back and forth from the lender to the borrower when a loan instalment is not paid. In the latter, when the borrower defaults on the loan instalment for the first time, the lender hands over the deed of trust to the trustee and asks him to initiate the proceedings to sell off the property. The trustee takes care of all the legal formalities, and he conducts a sale on his terms and disposes the property on behalf of the lender. In such a transaction, foreclosure is quick and doesn’t involve lengthy legal formalities.


When a trust deed is drafted, all the three parties concerned are present at the place where the document is prepared. However, in addition to this, the entire process is recorded or done in the presence of an experienced legal servant of that respective locality. This is to prove to the external world that the property in question is currently being used as security for a loan that the borrower has taken from the lender. Thus the borrower or trustee cannot use this property for any other purpose. Once the borrower has paid his loan in full, the beneficiary (lender) instructs the trustee to hand over the property back to the borrower. In some of the states in the US, the terms mortgage loan and trust deeds are still used interchangeably, because the basic mode of operation of both these transactions is quite similar.