How do you cancel title insurance policy before closing?

2 Notify your title company

The next step is to notify your title insurance company in writing that you want to cancel your policy. You should do this as soon as possible, preferably before the closing date, to avoid any delays or complications. You should include your name, policy number, property address, reason for cancellation, and the date you want the cancellation to take effect. You should also request a confirmation of cancellation and a refund of any prepaid premium or fees, if applicable. You should keep a copy of your cancellation letter and any correspondence with your title company for your records.

3 Notify your lender

If you are canceling your title insurance policy before closing, you should also notify your lender, as they may have a lien on your policy or require you to have a certain level of coverage. Your lender may not approve your cancellation, especially if they have already issued a loan commitment or a closing disclosure. They may also impose a penalty or a fee for changing or canceling your loan terms. You should consult with your lender and see what options you have and what impact your cancellation will have on your loan and your closing.

4 Consider the risks

Before you cancel your title insurance policy before closing, you should also consider the risks and consequences of doing so. Without title insurance, you may lose your legal rights to the property, face lawsuits from other parties who claim ownership or interest in the property, or incur losses from any defects or liens on the title that you were not aware of. You may also jeopardize your relationship with the seller, who may sue you for breach of contract or demand compensation for the damages caused by your cancellation. You may also lose your earnest money deposit, which is a portion of the purchase price that you pay upfront to show your good faith and commitment to the deal. You should weigh the pros and cons of canceling your title insurance policy before closing and make sure you are prepared to deal with the potential outcomes.

5 Seek legal advice

If you are unsure about how to cancel your title insurance policy before closing, or if you encounter any problems or disputes with your title company, your lender, or the seller, you should seek legal advice from a qualified real estate attorney. An attorney can help you understand your contract, your rights, and your obligations, and advise you on the best course of action for your situation. An attorney can also help you negotiate with the other parties, resolve any conflicts, and protect your interests in case of litigation.

6 Explore alternatives

Finally, if you are canceling your title insurance policy before closing because you are unhappy with the terms, the price, or the service of your title company, you may want to explore other alternatives before you make a final decision. You may be able to switch to a different title company that offers better rates, coverage, or customer service, or you may be able to negotiate with your current title company to modify or improve your policy. You may also be able to transfer your policy to another property or another buyer, if you are selling or buying another home. You should research the market and compare different options before you settle for canceling your policy.