The trouble with title insurance

Apparently the LA Times is publishing a mini series on this "Title Insurance" thing. Today the title is "The Trouble With Title Insurance" and a quote from it sums up a lot of what we have been posting here:

Consumer groups say policies are overpriced; home buyers have little choice but to pay

"Unfortunately, what's happened in this industry is there's been a lot of illegal kickbacks and incentives that have been paid by the title industry to others to steer business in a particular direction," Poizner said.

Title insurance is part of virtually every real estate transaction. It covers claims and legal fees for home buyers and lenders if problems arise -- even years later -- over ownership of a property's title.

Defects in title include errors or omissions in deeds, mistakes in examining records, forgery, liens for unpaid taxes or contractor's bills, conflicting wills related to the home and missing heirs who suddenly appear and claim to own the property.

Typically there are two title policies for each property: one to protect the home buyer; the other to protect the mortgage lender.

In California, coverage that protects the buyer would probably cost about $1,200 to nearly $2,000 for a $500,000 home. In Southern California, the policy is customarily paid for by the seller, but practices vary by region. In the San Francisco Bay Area, for example, the buyer usually pays.

So it looks like this type of insurance has been a controversy for years and it appears from these LA Times article that the insurance companies pay out much more in bribes and fines than they ever would pay out to actually policy holders.