Re-issue Credit for Title Insurance
When closing on a home, almost all buyers get title insurance. If the previous owner also had title insurance and certain conditions are met, the buyer may be entitled to a discount on the title insurance premium. Re-issue credit is a discount offered to parties that can prove a previous title insurance policy existed on the real estate being insured. Because it was previously insured, there’s less risk to the title insurance company and a lower rate will apply. One of three conditions must be met for re-issue credit to be available:
- The policy to be issued must have an effective date of less than three (3) years from the effective date of the policy protecting the seller in the current transaction.
- The policy must be on real property which is unimproved except for roads, bridges, drainage facilities and utilities where the current owner’s title has been insured prior to the application for a new policy (no time limit).
- Loan policies issued on refinancing of property insured by an original owner’s policy which insured the title of the current mortgagor (no time limit).
The re-issue credit will be the difference between the original insurance and the new insurance computed at the original insurance rates. The money a buyer can save with a re-issue credit can be significant: $445 on a $200,000 home. If you think a re-issue credit may apply, make sure to bring it to the attention of your title company before closing.