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 What is Title Insurance and do I Need it
Title insurance is confusing to home buyers

 

Many are not sure what it is, and why they need Title Insurance if they have Home Owners Insurance. Here is an explanation and answers to common questions. 

What is Title Insurance?

Title Insurance is to protect you against any liens or losses caused by title defects. When you are purchasing a home the title company does a search to ensure there is clear title on the property.  Title insurance protects property owners and lenders against unforeseen losses caused by title defects in the property’s history. These might include errors or omissions in a deed, forgery of documents, unresolved liens, or missing or unknown heirs. Even if the claim lacks any legal merit, they would still have to incur expenses to defend against a claim. Title insurance covers owners and lenders in situations like these, which means the cost to clear title is the burden of the title company.

California has two types of title insurance policies. The California Land Title Association (CLTA) policy covers property owners against potential losses. The policy promulgated by the American Land Title Association (ALTA) offers extended coverage to lenders, who have an interest in the property by virtue of a lien securing the mortgage loan.

Do I have to purchase title insurance when I close on my home?

No you don’t have to, yet it is recommended to protect you from future issues that may turn up on title when you are ready to sell your home. Yet if you’re getting a mortgage, most lenders will require a policy.

Is title insurance an annual expense?

The cost of the title insurance policy is a one-time expense, which his paid for at closing.

Who pays for title insurance?

Typically in Southern California the seller will pay for the policy, in Northern California the buyer pays.

Where do I Buy Title Insurance?

Title insurance is provided by Title Companies. The title company is indicated in the purchase contract.

Do I need title insurance if I pay cash?

Again, title insurance is not required yet it is a prudent thing to do as mentioned above if anything was missed on the title when you purchased the home, it could be costly to you to get clear title to sell.

Do I need title insurance for a condo?

            Yes for all the reasons stated above.

Do I need title insurance for a new home?

Yes for all the reasons stated above. Just because it is a new home, there could have been         something missed when the developer/builders purchased the land.

Can I buy title insurance after closing?

Yes, yet this can be risky. Title insurance only covers issues before you close on the transactions. If anything occurs after closing you will not be covered.

Why do I have to purchase two policies?

If you are getting a mortgage the lender will require a policy to cover their investment in the property, i.e. the amount of the loan. The owner’s policy is to protect you which is based on the purchase price of the home.

What is the cost of title insurance in California?

The cost is based on the purchase price of the property and may vary slightly from one title company to next. Although just like other insurances, title insurance is regulated by the Department of Insurance.

Does title insurance protect me against liens placed on my home after I purchase it?

Title insurance only protects you for events that occurred before you purchased the property, unlike other types of insurance.

February


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