What Is Title Insurance in the Timeshare Industry?

You might think that buying title insurance for a timeshare is a waste of money. That may be true in certain cases. In many, however, timeshare insurance can be an important tool to protect yourself against fraud.

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There are many different factors to consider when you buy a timeshare — title insurance is only one of them. Before you make any decisions, it is important to understand what this insurance is, what it covers and if it is really necessary. Here is a closer look at the function of title insurance in the timeshare industry.

Title insurance for a timeshare is very similar to title insurance for a home or other piece of property. It is available to the buyer to protect against monetary loss due to undeclared liens, title defects or other items that impede the transfer of property ownership. This may or may not be necessary because of the present condition of the timeshare market.

Today numerous timeshare owners are eager to get rid of their properties due to economic hardship. Some of these individuals become involved with organizations that do not have the correct license to deal with these property matters. Proper procedures are often not followed, which could affect the transfer of ownership of a deeded timeshare. When this insurance is not bought, the buyer is left unprotected in the case such unexpected difficulties as owed back taxes, unpaid liens, overdue fees and title defects. Title insurance can protect you up to the purchase price, not including closing costs. It can range in price from $200 to $500.

Many scams can be avoided by purchasing title insurance. One of the most common such scams in the industry involves a company that contacts a seller and tells them that a buyer is waiting, but will only complete the sale after a title search is paid. This is usually a large sum if money that is unnecessary for a seller to pay. The burden of proof of ownership is placed on the buyer. Purchasing title insurance can help guard against this and other types of fraud and wrongdoing.

When considering title insurance for a timeshare, you must understand who you are buying the property from. Timeshares that have been frequently transferred come with an increased risk of title defects, so the insurance may be a wise investment. This is also true of properties being sold by bulk resellers, since they are probably not the actual property owners. It is usually safer to purchase a timeshare from a new developer or an original owner, especially if you decide to not purchase title insurance.

The main benefit of title insurance is ensuring that the seller is the true owner of the property and retains all rights to sell it. Title insurance is also meant to guard against any issues that may arise with the title that could prevent proper transfer. Buying this insurance early will be proof to future buyers that the title is clear as well. In the end, whether you buy title insurance for a timeshare simply depends — as with most types of insurance — on how much security you want.

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Boris Razmiki

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