Title insurance in the timeshare industry is similar to title insurance for a home or other property purchase. Title insurance is optional for the buyer of a timeshare in order to protect them from financial loss due to undeclared liens, title defects, overdue maintenance fees, or other issues that may obstruct the transfer of property ownership. It may or may not be necessary depending on a number of factors, which is why it is important to understand exactly what it is and how it works.
Today the timeshare market is full of people who are desperate to sell their properties. Unfortunately, many organizations that claim to help with these sales are not properly licensed to deal with real estate matters. As a result, proper procedures are often not followed, which can affect the transfer of ownership of a deeded timeshare property, leaving the buyer unprotected from unexpected difficulties. While the average timeshare resale transaction usually does not encounter such issues, it is a good idea to consider insurance just in case.
When considering title insurance for a timeshare, you must determine who exactly you are buying the property from. If you are not buying directly from the original owner, the timeshare may be at higher risk for title defects, and would therefore be a stronger candidate for insurance. It is usually safer to purchase a timeshare either from the original owner or from a new developer, especially if you choose not to purchase insurance. After all, the main purpose of title insurance is to ensure that the seller of the timeshare has the right to sell it and that there are no issues with the title that would affect the transfer from their name to yours. Purchasing title insurance will also serve as proof to a buyer that the title is clear, should you decide to sell it in the future.
Title insurance can range from $200-$500, depending on the amount being insured, and only protects you up to the purchase price, not typically covering closing costs. In the end, it comes down to how much you are willing to spend to protect your timeshare investment and how much security you want.