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Notes -
New and genuine (or genuine-appearing) deeds are fairly uncommon. Full-blown title fraud happens -- this article estimates around 11k cases in 2022 -- but it's pretty rare (<0.0001% risk per year?), and generally more harmful in the sense that it's a ton of lawfare to clean up and out, rather than getting people evicted from their own homes.
((The latter bit is part of why I think anti-title insurance arguments focused on the low loss ratio are misguided. The goal of title insurance isn't to give you the cash value of a house or fence line if someone fucked up paperwork somewhere; it's to handle stuff so you keep your house or fence line unless there's no other less-costly option. That said, a lot of 'title lock' companies are just outright scams.))
That said, the risks are very far from evenly distributed, especially where localities have particularly exploitable practices or taking advantage of national borders and emphasizing areas of quick growth near vacant land.
Weird fuckery and outright mistakes are more common, and obsensibly more of what title insurance is focused around.
The loss ratio for title insurance includes all of the legal and administrative fees necessary to resolve the claim, up to and including straight up reimbursement. So yes, the sevarity of a valid claim is quite high, its just that claims are incredibly rare. I would also point out that compared to most other types of insurance, the overhead for title insurance is very, very low.
I dont think the argument is that title insurance shouldnt exist, its that the price has been spiked by absurb multiples due to effective collusion of the providers and their related industry contacts, and that property buyers are less aware of this price gouging due to the peculiar nature of real estate transactions.
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