Complex Systems with Patrick McKenzie (patio11) The $4,000 insurance policy designed to never pay out
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Nov 13, 2025 Explore the curious world of title insurance, which boasts a staggering 5% loss ratio compared to most insurance types. Discover why most Americans pay for this service even though it rarely pays out. Patrick dives into how property ownership is recorded in the U.S. and the quirks that lead to this costly scenario. He sheds light on the confusing marketplace where title insurance is sold and the incentives that keep buyers from shopping around. Plus, consider innovative alternatives like Attorney Opinion Letters and the implications for homeowners.
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U.S. Records Track Transactions, Not Ownership
- U.S. property records record transactions, not current ownership, creating uncertainty about who owns land.
- Ownership is inferred by chaining past transactions rather than a definitive government title certificate.
Use A Land Trust For Property Privacy
- If you want privacy when buying property, ask your real estate attorney about a land trust option.
- Land trusts are commonly used to keep ownership records out of public searchable datasets.
High Confidence Isn’t Legal Certainty
- High confidence from documents is different from absolute certainty about title; hidden facts can later invalidate a transfer.
- Off-record events like undisclosed marriages can retroactively void ownership despite clean database records.
