Hold Opens

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Hold Opens are used most often when an investor is buying a fixer-upper and planning on reselling their real estate investment for a profit within a 2 year time frame.

• The buyer pays an additional premium at closing (usually 10% of basic rate)
• Title Company keeps the file open after closing and no title insurance is issued at this time
• When the buyer becomes the seller they only pays for the difference in premiums between the purchase price and the selling price
• Title Policy is issued to final purchaser

Conditions for a Hold Open Title Insurance Policy

• Adverse matters that are recorded or become know to the title company must be satisfied before the policy is issued
• There must be a single transaction of the exact property on both the original commitment to buyer and final policy to end purchaser.
• Must sign affidavit acknowledging that buyer is aware they must sell the property within a given time period (usually 2 years)
• Both transactions must be insured through the same title company
• If the resale of the final purchase is not recoded with 2 years the policy will be issued in the initial sale and amount committed to perform Hold Open will be forfeited
• Potential drawbacks is initial buyer is not insured for any warranties of title that may be given in the deed to the final purchaser, since no owner policy is issued on first closing
• Always check with your title company to see what term and conditions apply
• Title Underwriters have different rules

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