The Interim Binder: Title Insurance Savings for Investors

Investors who plan to 'turn over' their properties within a short period of time should consider the Interim Binder to save on title insurance premiums. The interim binder is not, in itself, a policy of title insurance. When issued, however, it binds the insurer to issue a policy of title insurance within two years. The fee is a mere 10% of the basic policy fee.

When the deed of the final purchaser is recorded, the binder is exercised and a policy of title insurance is issued to the final purchaser. The only additional fee at that time is an additional liability charge based on the difference between the original selling price and the resale price. If the property resells for the same price or less, there is no additional title insurance cost.

Example: Mr. A sells a property to Mr. B for $600,000. The title rate is $1,600. Without a binder, when Mr. B resells for $650,000, the full title rate of $1,675 applies. With a binder, Mr. B pays only $160 (10% of $1,600) at purchase, then $75 at resale (the difference between $1,675 and $1,600) — a total of $235 instead of $1,675. That's a savings of over $1,400.

The binder can be extended beyond two years — for an additional 10%, you can extend it for two more years. The binder is not just for investors — clients who may transfer out of an area within two to four years can also benefit. In the unlikely event of a title claim during the binder period, the binder is surrendered and converted to a policy, and the claim is handled normally. The binder can also be exercised at the time of refinance, potentially saving hundreds of dollars on a new lender's policy. It works on virtually any type of property, including vacant land that is later developed and sold.

Team Goeglein at Fidelity National Title issues interim binders for investors and short-term owners across the South Bay and Westside LA. Contact Matt Goeglein or Xavier de la Piedra IV to determine if an interim binder is the right strategy for your next acquisition.