What is Title Insurance?
Title insurance is a contract of indemnity which guarantees that the title to the property is as reported. If it’s not as reported, we will reimburse the buyers for actual loss or damage under the condition specified in the policy. The title policy covers the insured for their loss up to the amount of the policy.
Title insurance assures owners that they are acquiring marketable title. Title insurance is designed to eliminate risk or loss caused by defects in title from the past. Title insurance provides coverage only for title problems which were already in existence at the time the policy was issued.
Title Search
Your Title Company will work to eliminate risks by performing a search of the public records through our own plant. The search consists of public records, laws and court decisions pertaining to the property to determine the current recorded ownership, any recorded ownership, any recorded liens or encumbrances or any other matters of record which could affect the title to the property. When a title search is complete, title issues a preliminary title report detaining the current status of title.
A preliminary report contains vital information which can affect the close of escrow: ownership of the subject property, how the current owners hold title, matters of record that specifically affect the subject property or the owners of the property and an informational plat map.
What Does a Title Policy Cover?
Not all risks can be determined by a title search, since certain things such as forgeries, identity of persons, incompetency, failure to comply with the law, or incapacity cannot be disclosed by an examination of the public records.
The preliminary title report is an offer to insure under certain situations, the title policy is a contract that gives coverage against such problems.
Note: If you decided to sell your home in the future, new title insurance will be needed to protect your buyer for the time prior to and during your ownership for any defects that may have occurred.
Title Policy Comparison
CLTA
• Someone else owns a recorded interest in your title
• A document is not properly signed, sealed, acknowledged or delivered
• Forgery, fraud, duress, incompetency, incapacity or impersonation
• Defective recording of any document
• Unmarketability of title
• Lack of a right of access to and from the land
ALTA-R
(same as above plus the following)
• Mechanic’s lien protection for work or materials done prior to the policy date except where the insured has agreed to
same
• Forced removal of the residential structure because it extends onto other land, an easement shown as an exception
to the policy, any unrecorded subsurface easement, or it violates an enforceable CC&R or zoning ordinance
• Unrecorded liens by the homeowner’s association
• Others have rights arising out of leases, contracts or options
• Someone else has an easement on your land
• Plain language
Homeowner’s Plus
(same as above plus the following)
• Building permit violations (from prior owners)
• Subdivision map coverage
• Restrictive covenant violations (from prior owners)
• Enhanced access feature
• Map inconsistencies protection
• Mineral extraction structure damage
• Post policy encroachment
• Post policy easement by prescription
• Encroachment of boundary walls or fences