Get a Title Insurance Policy Commitment before Buying a Real Estate Option

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Prior to ever buying a real estate option, you need to first contact a reputable attorney or title insurance or escrow company and have them perform a title

FORM 15.1 Sample Letter to Title Insurers

July 7, 2005

Ms. Paula Patterson Manager

Underwriting Department XYZ Title Insurance Company 5600 Del Cruise Way Orlando, FL 32867

Dear Ms. Patterson,

I am a real estate investor who buys real estate options on residential and commercial property located in the Greater Orlando area.

I am currently in search of a competent title insurance agency that represents a reputable title insurance underwriter who insures straight real estate options, which are not part of a leasehold interest.

Specifically, I am looking for a company with a knowledgeable and experienced underwriting staff in house, which is capable of making quick decisions regarding insurability issues.

Please contact me by e-mail at [email protected] at your earliest convenience to set up an appointment so that we may discuss my title insurance requirements in detail.

Thank you for your prompt response. Sincerely,

Ronald P. Frazier

Copyright Thomas J. Lucier 2005. To customize this document, download it to your hard drive from Thomas J. Lucier's web site at The document can then be opened, edited, and printed using Microsoft Word or another popular word processing application.

search to determine if they will issue an owner's title insurance policy commitment to insure the property's title. You must do this so you do not waste your valuable time pursuing potential option properties with titles that are riddled with title defects that cannot be quickly and inexpensively cured. An owner's title insurance policy commitment, sometimes referred to as a binder, is a temporary insurance contract providing for the future issuance of a permanent owner's title insurance policy after a valid instrument such as a deed, contract, or agreement for deed, lease, or real estate option creating an insurable interest or right in real property is executed, delivered, and recorded. I know an option investor in Manchester, New Hampshire, who once made the mistake of buying an option on a small, non-working dairy farm without first getting a title insurance policy commitment from a title insurer. And to make matters worse, this guy did not even have a title search done before he shelled out $15,000 for a one-year option. When he did contact a title insurer about insuring his option, they did a title search and found out that the husband and wife who were listed on the deed as the owners of record had five adult children who had recorded quit claim deeds from their parents, giving each one of them a 10 percent interest in the property. However, all of the children had left the state and had not spoken to good old Mom and Dad for over 10 years. Given the circumstances surrounding the property's fractured ownership, no title insurance company would touch it with a 10-foot pole. The investor eventually found two of the children, but they basically told him to drop dead. He now refers to this little episode as his $15,000 option seminar!

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